Which of the following does the current ratio measure?
A)The company's overall ability to pay liabilities
B)The company's rate of cash flow
C)The proportion of the company's assets that are financed with debt
D)The company's ability to pay current liabilities with current assets

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures the company's ability to meet current liabilities using current assets. It is calculated by dividing current assets by current liabilities. A higher current ratio indicates that the company has enough current assets to pay off its current liabilities.

Which of the Following Does the Current Ratio Measure