The current ratio is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to collect its receivables
C) The overall profitability of a company
D) Evaluating stock in a company from an investor's perspective

Question

Quizplus · Accepted Answer

The current ratio is used to evaluate the ability of a company to pay its current liabilities. It is calculated by dividing current assets by current liabilities to determine whether a company has enough short-term assets to cover its short-term debts.

The Current Ratio Is Used for Which Kind of Evaluation