The relationship between current assets and current liabilities is important in evaluating a company's

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The relationship between current assets and current liabilities is important in evaluating a company's liquidity, which refers to its ability to meet short-term obligations. In other words, it measures the company's ability to pay off its debts as they become due. If a company has more current assets than current liabilities, it has a better chance of meeting its obligations on time. Conversely, if it has more current liabilities than current assets, it may struggle to pay off its debts, which could result in insolvency.

The Relationship Between Current Assets and Current Liabilities Is Important