The current ratio
A) Is current assets divided by current liabilities
B) Helps to assess a company's ability to pay its debts in the near future
C) Suggests there may be problems in a business if it is less than 1
D) Is a measure of a company's liquidity
E) All of these

Question

Quizplus · Accepted Answer

All of the given options are true about the current ratio. It is calculated as current assets divided by current liabilities and helps to assess a company's ability to pay its debts in the near future. A current ratio less than 1 suggests there may be problems in a business and it is a measure of a company's liquidity.

The Current Ratio