What type of ratio measures a firm's ability to generate cash to meet current obligations by selling inventory and collecting revenue?
A) Earnings per share
B) Debt
C) Revenue recognition
D) Current
E) Activity

Question

Quizplus · Accepted Answer

The current ratio measures a firm's ability to meet its short-term obligations with its short-term assets. This includes the ability to generate cash by selling inventory and collecting revenue, making it the correct answer.

What Type of Ratio Measures a Firm's Ability to Generate