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If a company has a current ratio of 2, then this means that it hasMultiple Choice$1 of assets for every $1 of liabilities.too many liabilities.$2 of assets for every $2 of liabilities.$1 of assets for every $2 of liabilities.$2 of assets for every $1 of liabilities.

Question

If a company has a current ratio of 2, then this means that it hasMultiple Choice1ofassetsforevery1 of assets for every 1 of liabilities.too many liabilities.2ofassetsforevery2 of assets for every 2 of liabilities.1ofassetsforevery1 of assets for every 2 of liabilities.2ofassetsforevery2 of assets for every 1 of liabilities.

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Solution

The correct answer is "2ofassetsforevery2 of assets for every 1 of liabilities."

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. It compares a firm's current assets to its current liabilities.

If a company has a current ratio of 2, it means that the company has twice as many current assets as it has current liabilities. In other words, for every dollar (1)ofcurrentliabilities,thecompanyhastwodollars(1) of current liabilities, the company has two dollars (2) of current assets. This indicates that the company is in a good financial position to pay off its short-term debts.

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Similar Questions

A current ratio of 2 means that the business has $2 of current assets for every ______.Multiple choice question.$1 of current liabilities$2 of total liabilities$2 of current liabilities$1 of total liabilities

A current ratio of 2.20 indicates that:Multiple Choicefor each $1 in current assets, the company has $2.20 in current liabilities.for each $1 in total liabilities, the company has $2.20 in total assets.for each $1 in total assets, the company has $2.20 in total liabilities.for each $1 in current liabilities, the company has $2.20 in current assets.

The current ratio is calculated by dividing:a.Current assets by current liabilitiesb.Current liabilities by current assetsc.Total assets by total liabilitiesd.Total liabilities by total assets

Current assets divided by current liabilities is the:Multiple ChoiceCurrent ratio.Quick ratio.Debt ratio.Liquidity ratio.Solvency ratio.

If the current ratio is equal to 2, and current liabilities is 100, how much is the current assets?Select one:a.150b.50c.200d.250

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