A good measure of a company's liquidity is the current ratio, which is the ratio of its short-term assets to its short-term liabilities.

Question

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The current ratio measures a company's ability to pay off short-term debt obligations and is calculated by dividing current assets by current liabilities. A higher current ratio indicates a higher level of liquidity and therefore a company's ability to meet short-term obligations.

A Good Measure of a Company's Liquidity Is the Current