Which of the following best describes the current ratio?
A)Debt ratio
B)Operating performance ratio
C)Liquidity ratio
D)Efficiency ratio

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay off its short-term liabilities (debts due within one year) with its current assets (assets that can be easily converted to cash within one year). It is calculated by dividing current assets by current liabilities. This ratio helps investors and creditors assess a company's short-term solvency or liquidity.

Which of the Following Best Describes the Current Ratio