What ratio measures the ability of the firm to satisfy its short term obligations as they come due?

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The current ratio measures the ability of the firm to satisfy its short term obligations as they come due. It is calculated by dividing current assets by current liabilities. A higher current ratio indicates better ability to pay off short term debts. Activity ratios measure the efficiency of the company's use of assets, times interest earned ratio measures the company's ability to pay its interest expense, and inventory turnover ratio measures the efficiency of the company's inventory management.

What Ratio Measures the Ability of the Firm to Satisfy