Question

The current assets of Margo Company are $300,000. The current liabilities are $100,000.The current ratio expressed as a proportion is:___________.

a. 300%.
b. 3.0 : 1
c. .33 : 1
d. $300,000 ÷ $100,000.

Answer 1

b. 3.0 : 1

Step-by-step explanation:

Current ratio is used to measure a company's financial ability to pay short-term obligations or those due within one year. It is measure by Current asset/Current liability

The Current ratio = $300,000 / $100,000 = 3.0 : 1

Note: The higher the quick ratio, the better the company's liquidity position.