What is the ideal Current Ratio?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) - 2 : 1.
The ideal current ratio is 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.