Business FinancesQuestion 1137 of 1632
A contractor has current assets of $200,000 and current liabilities of $80,000. What is his current ratio?
a.1.6 to 1
b.2.5 to 1
c.3.0 to 1
d.0.4 to 1
Explanation
Current ratio = $200,000 / $80,000 = 2.5, expressed as 2.5:1. This means he has $2.50 of current assets for every $1.00 of current liabilities, a healthy short-term position.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)