If equal amounts are added to the numerator and the denominator of the current ratio and the ratio is over one, the ratio will always decrease the current ratio. Option 3
A company's ability to pay its current, or short-term, liabilities (debts and payables), with its current, or short-term, assets (cash, inventories, and receivables), is determined by the current ratio.
Current Assets / Current Liabilities equals the current ratio.
This comprises, among other things, sales tax payable, credit cards, and accounts payable. You may determine how much of your current liabilities can be met by current assets by dividing your entire current assets by your current liabilities.
A ratio of 1:1 means that current assets and liabilities are equal, and the company can just barely meet all of its short-term obligations.
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