Which of the following best describes the current ratio?
A) debt ratio
B) operating performance ratio
C) liquidity ratio
D) efficiency ratio

Question

Quizplus · Accepted Answer

The current ratio is a measure of a company's liquidity. It represents the company's ability to pay its short-term debts using its current assets, which include cash, accounts receivable, and inventory. A higher current ratio indicates that the company is more capable of paying off its short-term debts. Therefore, the current ratio is a liquidity ratio.

Which of the Following Best Describes the Current Ratio