Practice Current Ratio Formula - 19.2.1.a | 19. Financial Statement Analysis – Ratio Analysis | Management 1 (Organizational Behaviour/Finance & Accounting)
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19.2.1.a - Current Ratio Formula

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the formula for calculating the Current Ratio?

💡 Hint: Think about the two parts of the company's balance sheet.

Question 2

Easy

If a company has $400,000 in current assets and $200,000 in current liabilities, what is its Current Ratio?

💡 Hint: Use the formula and plug in the given numbers.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What is the formula for the Current Ratio?

  • Current Liabilities / Current Assets
  • Current Assets / Current Liabilities
  • Current Assets + Current Liabilities

💡 Hint: Recall the structure of the definition.

Question 2

True or False: A Current Ratio below 1 indicates a company can easily cover its short-term obligations.

  • True
  • False

💡 Hint: Consider what the ratio indicates about assets versus liabilities.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A tech startup has current assets of $1,200,000 and current liabilities of $800,000. Evaluate the startup's liquidity situation and discuss possible implications for future investment.

💡 Hint: Think about the implications of having a strong ratio in terms of attracting investors.

Question 2

If a company consistently reports a Current Ratio below 1.2 despite growth in revenue, what should management consider to improve liquidity?

💡 Hint: Focus on operational strategies that can directly impact liquidity.

Challenge and get performance evaluation