Question

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

Explanation:

The current ratio is calculated as $\frac{\text{Current Assets}}{\text{Current Liabilities}}$. A current ratio of $\frac{1}{2}$ means for every $1$ unit of current assets, there are $2$ units of current liabilities, or equivalently, for every $2$ units of current liabilities, there is $1$ unit of current assets. So the correct statement is "It has $1 in current assets for every $2 in current liabilities".

Answer:

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