Generally speaking,which appears to be a desirable current ratio?
A)20 to 1.
B)1 to 20.
C)2 to 1.
D)1 to 2.

Question

Quizplus · Accepted Answer

A current ratio of 2 to 1 is generally considered desirable, as it indicates that the company has enough current assets to cover its current liabilities. A ratio of 20 to 1 would indicate that the company has an excessive amount of current assets that may not be efficiently used, while a ratio of 1 to 20 would indicate that the company has a high level of current liabilities in comparison to its current assets, potentially leading to financial strain. A ratio of 1 to 2 would indicate that the company has just enough current assets to cover its current liabilities, leaving little room for unexpected expenses or changes in the market.

Generally Speaking,which Appears to Be a Desirable Current Ratio