The current ratio is
A) used to evaluate a company's liquidity and short-term debt paying ability
B) a solvency measure that indicates the margin of safety of a bondholder
C) calculated by dividing current liabilities by current assets
D) calculated by subtracting current liabilities from current assets

Question

Quizplus · Accepted Answer

The current ratio is commonly used to evaluate a company's liquidity and short-term debt paying ability by measuring its ability to meet short-term obligations. It is calculated by dividing current assets by current liabilities.

The Current Ratio Is