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Which of the following current ratio indicate a strong liquidity position of a company?      A....

Which of the following current ratio indicate a strong liquidity position of a company?
    
A. 0.6
B. 1.5
C. 1.2
D. 0.9
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Answer #1

Current Ratio is the liquidity ratio which indicates the firm ability to pay its short term liabilities out of its current assets. The higher the current ratio, the more likely it is that the company will be able to pay of its short term liabilities. Hence, the firm with higher Current Ratio indicates a strong liquidity position.

The formula for Current Ratio is Current Assets divided by Current liabilities.

Option (B) is correct with a current ratio of 1.5 which is higher than the other options.

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