Which of the following rations considers the relationship between current assets and current liabilities?
A) Quick ratio
B) Current ratio
C) Capital gearing ratio
D) ROCE

Question

Quizplus · Accepted Answer

The current ratio is a ratio that considers the relationship between current assets and current liabilities. It is calculated by dividing the total current assets by the total current liabilities. This ratio is used to indicate a company's ability to meet its short-term financial obligations. A higher current ratio indicates a better ability to pay off short-term obligations. Quick ratio (A) is similar, but excludes inventory from current assets. Capital gearing ratio (C) measures a company's long-term solvency by comparing the amount of debt to equity, while ROCE (D) measures a company's profitability.

Which of the Following Rations Considers the Relationship Between Current