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Current assets are $911,000 and current liabilities are $364,000. What is the current ratio (to one decimal)?
A3.5
B0.4
C1.4
D2.5
Answer & Solution
Correct answer: D. 2.5
1. Current ratio = current assets / current liabilities.
2. = $911,000 / $364,000.
3. = 2.5.
4. Trap: 0.4 (option B) inverts the ratio, dividing liabilities by assets.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.3.4 "Current Ratio", p.294_
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