Florida General Contractor Practice Exam 2025 - Free Contractor License Practice Questions and Study Guide

A current ratio of 1.5 to 1 indicates that for every dollar of liabilities, the company has $1.50 in assets. This suggests a healthy liquidity position, meaning that the company is well-equipped to meet its short-term obligations.

When examining the current ratio in this context, a ratio above 1 typically indicates that the company's current assets exceed its current liabilities, which is a positive sign of financial stability. Specifically, a ratio of 1.5 signifies that the assets not only cover the liabilities but do so by a margin of 50%, highlighting good financial management and the capability to handle unforeseen expenses or downturns.

This level of coverage implies that the company can effectively fulfill its short-term debts while potentially investing in growth opportunities. Thus, it underscores the company’s solid standing in terms of its current financial obligations and reflects positively on its overall financial health.