The current ratio measures a company's ________.
A) overall ability to pay liabilities
B) ability to pay current liabilities from current assets
C) proportion of assets that are financed by debt
D) rate of cash flow

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay its current liabilities with its current assets. It shows the proportion of current assets that are available to cover each dollar of current liabilities. A higher current ratio indicates a better ability to meet short-term obligations.

The Current Ratio Measures a Company's ________