If Line Ltd has a current ratio of 2.5:1 and current assets are $600,000, how much are the company's current liabilities?
A)$240,000.
B)$300,000.
C)$360,000.
D)$200,000.

Question

Quizplus · Accepted Answer

The current ratio is calculated as current assets divided by current liabilities. Given a current ratio of 2.5:1 and current assets of $600,000, we can set up the equation 2.5 = $600,000 / current liabilities. Solving for current liabilities gives us $600,000 / 2.5 = $240,000.

If Line Ltd Has a Current Ratio of 2