If a company's current ratio increases from 1.1 to 1.3 from one year to the next, it can be concluded that:
A)the liquidity has increased.
B)the current assets have increased.
C)the current liabilities have decreased.
D)None of the above

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. An increase from 1.1 to 1.3 indicates improved liquidity, as the company has more current assets relative to its current liabilities than before.

If a Company's Current Ratio Increases from 1