The ________ is used to measure the short-term solvency of a venture.

Question

Quizplus · Accepted Answer

The current ratio measures a venture's ability to pay its short-term liabilities with its current assets. It is calculated by dividing current assets by current liabilities. A high current ratio (above 1) indicates that a venture has enough current assets to cover its current liabilities, indicating strong short-term solvency. Therefore, option D is the correct answer. Option A measures profitability, option B measures the effectiveness of credit and debt management, and option C measures a venture's long-term solvency.

The ________ Is Used to Measure the Short-Term Solvency of a Venture