The value of current assets divided by current liabilities is called
A)inventory turnover ratio.
B)current ratio.
C)total asset to total liabilities ratio.
D)quick ratio.

Question

Quizplus · Accepted Answer

The value of current assets divided by current liabilities is called the current ratio. It is used to measure a company's ability to pay off its short-term debt obligations. The higher the current ratio, the more capable the company is of paying off its debts. The other options (inventory turnover ratio, total asset to total liabilities ratio, and quick ratio) are different ratios used to analyze a company's financial position.

The Value of Current Assets Divided by Current Liabilities Is