The most important information needed to determine if companies can pay their current obligations is the
A) profit for this year.
B) projected profit for next year.
C) relationship between current assets and current liabilities.
D) relationship between current and non-current liabilities.

Question

Quizplus · Accepted Answer

The relationship between current assets and current liabilities, often expressed as the current ratio, is crucial for determining a company's ability to pay its short-term obligations. This measure provides insight into the company's liquidity by comparing assets that are expected to be converted into cash within a year to liabilities due within the same period.

The Most Important Information Needed to Determine If Companies Can