Accounting for IGCSE & O level - Advanced Principles (Section 8 - No. 12)
Which of the following statements is/are true regarding the interpretation of the working capital ratio (current ratio)?
A ratio of 1:1 or more indicates a sufficient ability to meet current obligations.
A ratio of less than 1:1 may indicate potential problems in paying current liabilities.
It measures a business's ability to pay its current liabilities.
It is not the same as the quick ratio.
Explanation
The working capital ratio (current ratio) reflects how a business can meet its short term liabilities.
Comments (0)
