A liquidity ratio that indicates the extent to which short-term assets can decline and still be adequate to pay short-term liabilities is referred to as the:
A) current ratio.
B) return on investment.
C) debt-equity ratio.
D) leverage ratio.
E) profitability ratio.

Question

Quizplus · Accepted Answer

The most common liquidity ratio is current assets to current liabilities, called the current ratio or net working capital ratio. This ratio indicates the extent to which current assets can decline and still be adequate to pay current liabilities.

A Liquidity Ratio That Indicates the Extent to Which Short-Term