The relationship between current assets and current liabilities is
A)useful in determining profitabilty.
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, also known as the current ratio, is a measure of a company's liquidity. It shows whether a company has enough short-term assets to cover its short-term debt obligations. A higher current ratio indicates that a company is more capable of paying off its current liabilities and is generally considered a good sign of a company's financial health.

The Relationship Between Current Assets and Current Liabilities Is