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

Question

Quizplus · Accepted Answer

The value of current assets divided by current liabilities is called the current ratio. This ratio is used to measure a company's ability to pay off its short-term obligations using its current assets. A higher current ratio indicates that a company is more likely to meet its short-term liabilities.

The Value of Current Assets Divided by Current Liabilities Is