The current ratio
A)Is current assets divided by current liabilities
B)Helps to assess a company's ability to pay its debts in the near future
C)Reveals problems in a business if it is less than 1
D)Is current assets divided by current liabilities and helps to assess a company's ability to pay its debts in the near future
E)All of these

Question

Quizplus · Accepted Answer

The current ratio is indeed calculated as current assets divided by current liabilities, which helps assess a company's ability to pay its short-term obligations. A ratio less than 1 indicates that a company might have problems meeting its short-term obligations, making all the statements correct.

The Current Ratio