Jill's Business Has Current Assets of $50,000 and Current Liabilities

question 19

Multiple Choice

Jill's business has current assets of $50,000 and current liabilities of $25,000. Which of the following statements is true about her company's current ratio?

• A) The ratio is 50 percent and is acceptable for most industries.
• B) The ratio is 2.0 and is acceptable for most industries.
• C) The ratio is $25,000 and is not acceptable for most industries.
• D) The current ratio cannot be determined from the information given.

---

Definitions:

Critical Thinking

The objective analysis and evaluation of an issue in order to form a judgment, crucial in problem solving and decision-making processes.

Reasoned Thought

The process of thinking about something in a logical, sensible way, often involving critical evaluation.

Hierarchical Process

A structured method where tasks or decisions are arranged in levels of importance or authority.

Practical Knowledge

Knowledge gained through direct experience or practice, as opposed to theoretical understanding.