The current ratio is a
A) liquidity ratio.
B) profitability ratio.
C) long-term solvency ratio.
D) market strength ratio.

Question

Quizplus · Accepted Answer

The current ratio is a measure of a company's liquidity, which is its ability to meet its short-term financial obligations with its current assets. It compares a company's current assets to its current liabilities, indicating whether the company has enough short-term assets to cover its short-term liabilities. Therefore, the current ratio is an important liquidity ratio.

The Current Ratio Is a