The current ratio
A) is a measure of efficiency.
B) is a measure of leverage.
C) is a measure of profitability.
D) is a measure of a company's liquidity.

Question

Quizplus · Accepted Answer

The current ratio is a measure of a company's liquidity, indicating its ability to pay off its short-term liabilities using its current assets. It measures the company's ability to meet its current obligations, which are those due within one year. A current ratio of 1:1 or higher is considered a good indicator of a company's financial health as it suggests that it can meet its current liabilities.

The Current Ratio