4 Views

Question : Which of the following are the objectives and significance of the current ratio?

Option 1: Current ratio is used to assess the firm’s ability to meet its short-term liabilities on time. 

Option 2: According to accounting principles, a current ratio of 2:1 is supposed to be an ideal ratio. It means that the current assets of a business should, at least, be twice its current liabilities.

Option 3: The higher the ratio, the better it is, because the firm will be able to pay its current liabilities more easily.

Option 4: All of the above.


Team Careers360 5th Jan, 2024
Answer (1)
Team Careers360 24th Jan, 2024

Correct Answer: All of the above.


Solution : Answer = All of the above.

All of the statements are correct regarding the objectives and significance of the current ratio. It evaluates the firm's ability to meet short-term liabilities, with a ratio of 2:1 considered ideal, and a higher ratio indicating better liquidity and ability to meet obligations.
Hence, the correct option is 4.

Related Questions

UPES Integrated LLB Admission...
Apply
Ranked #28 amongst Institutions in India by NIRF | Ranked #1 in India for Academic Reputation by QS University Rankings | 16.6 LPA Highest CTC
SLAT 2025 - The Symbiosis Law...
Apply
Conducted by Symbiosis International (Deemed University) | Ranked #5 in Law by NIRF | Ranked #2 among best Pvt Universities by QS World Rankings
Jindal Global Law School Admi...
Apply
Ranked #1 Law School in India & South Asia by QS- World University Rankings | Merit cum means scholarships
Symbiosis Law School Pune Adm...
Apply
NAAC A++ Accredited | Ranked #5 by NIRF
Nirma University Law Admissio...
Apply
Grade 'A+' accredited by NAAC
Great Lakes PGPM & PGDM 2025
Apply
Admissions Open | Globally Recognized by AACSB (US) & AMBA (UK) | 17.3 LPA Avg. CTC for PGPM 2024 | Application Deadline: 1st Dec 2024
View All Application Forms

Download the Careers360 App on your Android phone

Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile

150M+ Students
30,000+ Colleges
500+ Exams
1500+ E-books