With $2,000,000 of current assets and $1,000,000 of current liabilitie…

Question

With $2,000,000 of current assets and $1,000,000 of current liabilities, the current ratio is:

Accepted Answer

D. Two to one

1. The current ratio divides current assets by current liabilities.
2. Divide $2,000,000 by $1,000,000.
3. That is a 2:1 proportion of current asset value to current liabilities.
4. So the ratio is two to one.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 19 'The Importance of Trade Credit and Working Capital in Planning', sections 19.1-19.5_

Answer

Ten to one

Answer

Four to one

Answer

Five to one

With $2,000,000 of current assets and $1,000,000 of current liabilities, the current ratio is:

Keep practising Working Capital Management