The current ratio measures a company's:
A)overall ability to pay liabilities.
B)ability to pay current liabilities with current assets.
C)the proportion of assets that are financed by debt.
D)rate of cash flow.

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay its current liabilities with its current assets. It provides insight into a company's short-term solvency and ability to meet its obligations as they come due. A higher current ratio indicates a better ability to pay off short-term debts.

The Current Ratio Measures a Company's