Current ratio of X Itd. is 2.4.1 and Y ltd. is 8:1. Choose the most appropriate options from
the followings
(a) Y lid is better than X ltd.
(b Both companies are having ideal current ratio
X ltd. is better than Y ltd.
(d) Both the companies are having poor liquidity
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Answers
Answer:
Current ratio of X Itd. is 2.4.1 and Y ltd. is 8:1. Choose the most appropriate options from
the followings
(a) Y lid is better than X ltd.
The most appropriate option is (b) Both companies are having ideal current ratio.
The current ratio is a financial ratio of a company's ability to pay off its short-term liabilities with its current assets.
For X ltd., a current ratio of 2.4:1 indicates that the company has current assets that are 2.4 times its current liabilities, which is considered a healthy current ratio.
For Y ltd., a current ratio of 8:1 also indicates that the company has current assets that are 8 times its current liabilities, which is also considered a healthy current ratio.
Since both companies are in a good position, as they have current assets that are greater than their current liabilities.
The most appropriate option is (b) Both companies are having ideal current ratio.
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