Important information needed to determine if companies can pay their current obligations is the
A) profit for this year.
B) projected profit for next year.
C) relationship between current assets and current liabilities.
D) relationship between current and non-current liabilities.

Question

Quizplus · Accepted Answer

The relationship between current assets and current liabilities, also known as the current ratio, is a key indicator of a company's ability to pay its current obligations. It shows whether a company has enough current assets to cover its current liabilities. Profit for this year or projected profit for next year may not necessarily reflect the company's ability to pay its current obligations, and the relationship between current and non-current liabilities does not provide information on the company's short-term liquidity.

Important Information Needed to Determine If Companies Can Pay Their