Which of the following statements is an accurate interpretation of the current ratio?
A) A current ratio of 1.5 or higher is considered a high-risk ratio.
B) A current ratio below 1.00 is considered a good, safe ratio.
C) A current ratio of 2.0 indicates very strong ability to pay current liabilities.
D) A current ratio of 0.60 or lower is a good, safe ratio.

Question

Quizplus · Accepted Answer

A current ratio of 2.0 indicates that a company has twice the current assets compared to current liabilities, which is considered a very strong ability to pay current liabilities. Options A, B, and D are inaccurate statements about the current ratio.

Which of the Following Statements Is an Accurate Interpretation of the Current