The current ratio indicates the:
A) funds employed by the shareholders of the company.
B) amount of readily liquid current assets for each dollar of urgent liabilities.
C) amount of current assets to meet each dollar of current liabilities.
D) profitability of the business.

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities, therefore indicating the amount of current assets available to meet each dollar of current liabilities. This helps to assess the short-term solvency of a company and its ability to pay off its debts.

The Current Ratio Indicates The