Question

if the current ratio for a business is greater than one, which of the following is true? the business will have fewer dollars in current assets than it has in current liabilities. the business has exactly $1 in current assets for every $1 in current liabilities. the business has more dollars in current assets than it has to cover in current liabilities.

Explanation:

The current ratio is calculated as $\frac{\text{Current Assets}}{\text{Current Liabilities}}$. If the current ratio is greater than 1, it means $\text{Current Assets}>\text{Current Liabilities}$ (since when we divide current assets by current liabilities and get a result greater than 1, the numerator (current assets) must be larger than the denominator (current liabilities)). The first option says current assets are fewer than current liabilities (which would make the ratio less than 1), and the second option says the ratio is 1 (current assets = current liabilities). So the third option is correct.

Answer:

The business has more dollars in current assets than it has to cover in current liabilities.