Current assets divided by current liabilities is the:
A) Solvency ratio.
B) Liquidity ratio.
C) Quick ratio.
D) Current ratio.
E) Debt ratio.

Question

Quizplus · Accepted Answer

Current assets divided by current liabilities is known as the current ratio. This ratio is a measure of a company's liquidity and ability to meet short-term obligations. It indicates whether a company has enough current assets to cover its current liabilities. A current ratio of 1 or higher is generally considered a good indication of a company's financial health.

Current Assets Divided by Current Liabilities Is The