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Home Questions CFJNB5U53S
Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

What is the ideal Current Ratio?

Options:

1 : 1

2 : 1

1 : 2

0.5 : 1

Correct Answer:

2 : 1

Explanation:

The correct answer is Option (2) - 2 : 1

Current Ratio = Current Assets / Current Liabilities.
This ratio measures the company's ability to pay off its current liabilities with its current assets. A Current Ratio greater than 1 indicates that the company has sufficient current assets to cover its current liabilities, which is considered a healthy liquidity position. The ideal ratio is 2:1.

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