The relationship between current assets and current liabilities is
A)useful in determining profitability.
B)useful in evaluating a company's liquidity.
C)useful in evaluating a company's solvency.
D)useful in determining the amount of a company's non-current debt.

Question

Quizplus · Accepted Answer

The relationship between current assets and current liabilities, known as the current ratio, is a key indicator of a company's liquidity. It measures a company's ability to pay off its short-term obligations with its short-term assets.

The Relationship Between Current Assets and Current Liabilities Is