Question

Current ratio of the company is 2 is to 1 state the reason whether the payment of dividend would improve reduce or not change the ratio

Answer 1

Current Ratio is the ratio of total current assets and total current liabilities..

Current Ratio= Current Assets / Current Liabilities

Given current ratio is 2: 1

so this company has 2x times of current assets for xtimes of current liabilities

[Favourable current ratio is 2:1 , a company with ratio Less than this needs to make changes to improve its longevity]

Payment of dividend is a financial transaction which is no where related to either current Assets or current liabilities inorder to affect the current ratio..

So The payment of dividend would neitherreduce not change the ratio in any form