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

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing a company's current assets by its current liabilities. This ratio measures a company's ability to pay its current liabilities with its current assets. A higher ratio indicates a better ability to meet short-term obligations, while a lower ratio may suggest liquidity issues.

The Current Ratio Measures a Company's ________