Question

During the first quarter of the previous year, the current ratio at the Blue Hotel was 1.25 to 1.00. Three months into the New year, the recent current ratio is 2.00 to 1.00. Which of the following best explains the Blue Hotel’s current ratio trend into the New Year? Group of answer choices Blue Hotel has $.75 cents of current assets for every $1.00 of current liabilities. Blue Hotel has $2.00 of current liabilities for every $1.00 of current assets. Blue Hotel has $2.00 of current assets for every $1.00 of current liabilities. Blue Hotel has $.75 cents of current liabilities for every $1.00 of current assets.

Answer 1

Solution:

As current ratio of first three month of new year is 2:1, the statement that best explains the Blue Hotel’s current ratio trend into the New Year is "Blue Hotel has $2.00 of current assets for every $1.00 of current liabilities."

Hence 3rd option is correct.