For which of the following is the working capital and current ratio is most useful?
A)In evaluating a company's liquidity.
B)In evaluating a company's solvency.
C)In evaluating a company's profitability.
D)In evaluating a company's revenues.

Question

Quizplus · Accepted Answer

The working capital and current ratio are most useful in evaluating a company's liquidity, which refers to its ability to meet its short-term obligations with its current assets. The working capital ratio measures the company's ability to meet its short-term obligations by comparing its current assets to its current liabilities. The current ratio, on the other hand, measures the company's ability to pay off its short-term obligations with its current assets. Therefore, these ratios are key indicators of a company's liquidity and its ability to meet its short-term obligations.

For Which of the Following Is the Working Capital and Current