A company uses current ratio to analyze its financial position.Which one of the following types of information can be obtained from current ratio?
A)efficiency of inventory management
B)productivity of the company's assets
C)information on the short-term solvency
D)information on the total debt of the company
E)information on financial leverage

Question

Quizplus · Accepted Answer

The current ratio, calculated as current assets divided by current liabilities, provides information on a company's short-term solvency, indicating its ability to cover short-term obligations with its short-term assets.

A Company Uses Current Ratio to Analyze Its Financial Position