Dollar Ltd has a current ratio of 2:1. This means that:
A) its current assets are insufficient to meet its current liabilities.
B) there is $2 of current assets for every $1 of current liabilities.
C) its current assets are half its current liabilities.
D) its current assets are equal to its current liabilities.

Question

Quizplus · Accepted Answer

A current ratio of 2:1 means that there are $2 of current assets for every $1 of current liabilities. This indicates that the company has sufficient current assets to cover its short-term obligations.

Dollar Ltd Has a Current Ratio of 2:1