A weakness of the current ratio is
A)the difficulty of the calculation.
B)that it doesn't take into account the composition of the current assets.
C)that it is rarely used by sophisticated analysts.
D)that it can be expressed as a percentage, as a rate, or as a proportion.

Question

Quizplus · Accepted Answer

The current ratio does not differentiate between types of current assets, which can vary in liquidity. This means it doesn't consider how easily assets can be converted to cash, which is a limitation in assessing a company's short-term financial health.

A Weakness of the Current Ratio Is