A contractor's current assets total $245,000 and current liabilities total $180,000. What is the current ratio and what does it indicate?
Correct Answer
B) 1.36; indicates adequate liquidity
Current ratio = Current Assets ÷ Current Liabilities = $245,000 ÷ $180,000 = 1.36. A ratio above 1.0 generally indicates adequate liquidity
Why This Is the Correct Answer
Current ratio = Current Assets ÷ Current Liabilities = $245,000 ÷ $180,000 = 1.36. A ratio above 1.0 generally indicates adequate liquidity
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