The current ratio is a commonly used ________ ratio.

Question

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The current ratio measures a company's ability to meet its short-term obligations using its current assets. It is therefore a measure of a company's liquidity, or its ability to convert assets into cash to pay debts as they come due. Leverage ratios measure a company's use of debt financing, profitability ratios measure a company's ability to generate earnings, and activity ratios measure a company's efficiency in managing its assets.

The Current Ratio Is a Commonly Used ________ Ratio