The relationship of current assets to current liabilities is used in evaluating a company's
A) profitability.
B) revenue-producing ability.
C) short-term debt paying ability.
D) long-range solvency.

Question

Quizplus · Accepted Answer

The relationship of current assets to current liabilities, known as the current ratio, is a liquidity ratio that measures a company's ability to pay off its short-term liabilities with its short-term assets. This ratio is crucial for assessing a company's short-term debt-paying ability.

The Relationship of Current Assets to Current Liabilities Is Used