Michigan Builders License Practice Exam

To determine the working capital ratio, also known as the current ratio, you divide the total current assets by the total current liabilities. In this case, current assets amount to $30,000, while current liabilities total $15,000.

The calculation would be as follows:

Working Capital Ratio = Current Assets / Current Liabilities

Working Capital Ratio = $30,000 / $15,000

Working Capital Ratio = 2

This result indicates that there are twice as many current assets available to cover current liabilities, suggesting a strong liquidity position for the business. Therefore, the correct answer is indeed indicative of a ratio of 2.