The ________ ratio measures the extent to which a firm is able to cover its short-term obligations (usually defined as obligations due within the next year)with its short-term assets.
A)ROE
B)current
C)inventory turnover
D)working capital

Question

Quizplus · Accepted Answer

The current ratio is the ratio of a company's current assets to its current liabilities, and measures the firm's ability to pay its short-term obligations with its short-term assets. A higher current ratio indicates a better ability to cover short-term obligations. ROE measures the profitability of a company, inventory turnover measures how quickly a company sells its inventory, and working capital is the difference between current assets and current liabilities.

The ________ Ratio Measures the Extent to Which a Firm