The current ratio ______.
A) shows the current level of profits
B) shows the current ratio of sales to profits
C) shows the ratio of debt to profits
D) shows the firm's ability to cover its current liabilities with its current assets

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. It does this by comparing a firm's current assets to its current liabilities.

The Current Ratio ______