The relationship between current assets and current liabilities is
A) useful in evaluating a company's liquidity.
B) called the matching principle.
C) useful in determining the amount of a company's long-term debt.
D) useful in determining proﬁt.

Question

Quizplus · Accepted Answer

The relationship between current assets and current liabilities, known as the current ratio, is a key indicator of a company's liquidity. It shows a company's ability to cover its short-term obligations with its short-term assets.

The Relationship Between Current Assets and Current Liabilities Is