The current ratio is
A) used to evaluate a company's liquidity and short-term debt paying ability.
B) is a solvency measure that indicated the margin of safety of a noteholder or bondholder.
C) calculated by dividing current liabilities by current assets.
D) calculated by subtracting current liabilities from current assets.

Question

Quizplus · Accepted Answer

The current ratio is a liquidity measure that evaluates a company's ability to pay its short-term debts using its current assets. It is calculated by dividing current assets by current liabilities.

The Current Ratio Is