Question

if a business has a current ratio of 2 which of the following is true? it has $2 in current assets for every $1 in current liabilities. it has $1 in current assets for every $2 in current liabilities. it has $3 in current assets for every $2 in current liabilities.

Explanation:

The current ratio is calculated as $\text{Current Ratio}=\frac{\text{Current Assets}}{\text{Current Liabilities}}$. Given a current ratio of 2, this means $\frac{\text{Current Assets}}{\text{Current Liabilities}} = 2=\frac{2}{1}$, so for every $1 in current liabilities, there are $2 in current assets.

Answer:

A. It has $2 in current assets for every $1 in current liabilities.