A current ratio of 3.50 means
A)There is $3.50 of current assets available to pay every dollar of current debt.
B)There is $3.50 available to pay for all debt.
C)There is $3.50 of current liabilities that need to be paid immediately.
D)Nothing meaningful can be determined from this information.

Question

Quizplus · Accepted Answer

A current ratio of 3.50 means that for every dollar of current debt, there are $3.50 of current assets available to pay off that debt. This indicates a healthy liquidity position for the company, as it has more than enough current assets to cover its current liabilities.

A Current Ratio of 3.50 Means