What is the ratio of total current assets to current liabilities?
A) activity ratio
B) profitability ratio
C) current ratio
D) net margin ratio

Question

Quizplus · Accepted Answer

The ratio of total current assets to current liabilities is known as the current ratio. This ratio is a measure of a company's ability to pay its short-term obligations. A current ratio of 2 or higher is typically considered good, indicating that a company has enough current assets to cover its current liabilities twice over. Therefore, the current ratio is a liquidity ratio, which falls under the broader category of activity ratios.

What Is the Ratio of Total Current Assets to Current