Business FinancesQuestion 52 of 1605
A contractor's current ratio is 0.8. This means:
a.The company has $0.80 in current assets for every $1.00 in current liabilities
b.The company has more current assets than current liabilities
c.The company is highly liquid
d.The company has an 80% profit margin
Explanation
Current ratio = Current Assets ÷ Current Liabilities. A ratio below 1.0 means current liabilities exceed current assets — a potential liquidity problem signaling the contractor may struggle to pay short-term debts.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)