A current ratio of 2.2 would appear to show that the company has a healthy current...

Question

Question

A current ratio of 2.2 would appear to show that the company has a healthy current ratio.

Is this statement true or false.

Answer 1

Answer #1

True.

Current ratio = current assets / current liabilities.

Current ratio shows the ability of the firm to meet its current obligations.

A current ratio of greater than 1 means that, the company is in a good position to meet its current obligations.

In the given case the current ratio of the company is 2.2, which means that the company has a healthy current ratio.

Answer 2

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