BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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2
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3
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4
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5
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Detailed explanation-1: -A current ratio of 2:1 is considered ideal in many cases. This means that the current assets can cover the current liabilities two times over.
Detailed explanation-2: -The current ratio weighs up all of a company’s current assets to its current liabilities. A good current ratio is typically considered to be anywhere between 1.5 and 3.
Detailed explanation-3: -The business currently has a current ratio of 2, meaning it can easily settle each dollar on loan or accounts payable twice. A rate of more than 1 suggests financial well-being for the company.
Detailed explanation-4: -In general, investors look for a company with a current ratio of 2:1, meaning current assets twice as large as current liabilities. A current ratio less than one indicates the company might have problems meeting short-term financial obligations.
Detailed explanation-5: -Ideal level of current ratio is 2:1. High ratio indicates under trading and over capitalization.