The current ratio:
A)is a measure of a firm's ability to pay its current liabilities.
B)equals current liabilities divided by current assets.
C)equals total assets divided by total liabilities.
D)is a measure of profitability.

Question

Quizplus · Accepted Answer

The current ratio equals current assets divided by current liabilities.It is used to determine whether a firm has sufficient cash or other current assets on hand to pay the liabilities that are due in the near future.

The Current Ratio