The current ratio helps assess a company's
A)profitability.
B)asset turnover.
C)capital structure leverage.
D)solvency.

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay its short-term obligations, usually within a year. It compares a company's current assets to its current liabilities, providing insight into the company's short-term solvency. A higher current ratio indicates a better ability to meet short-term obligations, while a lower current ratio indicates a potential short-term liquidity issue. Therefore, the current ratio is helpful in assessing a company's solvency.

The Current Ratio Helps Assess a Company's