The relationship of current assets to current liabilities is used in evaluating a company's
A) operating cycle.
B) revenue-producing ability.
C) short-term debt paying ability.
D) long-range solvency.

Question

Quizplus · Accepted Answer

The relationship of current assets to current liabilities (current ratio) is a measure of a company's ability to pay its short-term debts. It indicates whether a company has enough current assets to cover its current liabilities.

The Relationship of Current Assets to Current Liabilities Is Used