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Which of the following statements is true? A. The use of the current ratio does not...

Which of the following statements is true?

A. The use of the current ratio does not make it possible to compare companies of different sizes.

B. A current ratio of 1.2 to 1 indicates that a company’s current assets are less than its current liabilities.

C. All companies, regardless of size, should have a current ratio of at least 2:1.

D. The current ratio is a more dependable indicator of liquidity than working capital.

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Answer #1

Correct Answer: C) All companies, regardless of size, shoulf havr a current ratio of at least 2:1

Reason : Current Ratio is the ratio between Current Assets and Current Liability. A 2:1 ratio is ideal as it states that company has double Current Assets as compared to Current Liabilities , it shows company has sufficient funds to pay its liabilities.

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