The current ratio excludes
A) accrued interest
B) inventory
C) cash equivalents
D) retained earnings

Question

The current ratio excludes​
A) ​accrued interest
B) ​inventory
C) ​cash equivalents
D) ​retained earnings

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It includes current assets (such as cash, cash equivalents, inventory, and accounts receivable) and current liabilities (such as accounts payable and accrued expenses). Retained earnings, however, are part of shareholders' equity and not considered in the current ratio calculation, as they are not a current asset or liability.

The Current Ratio Excludes​

The Current Ratio Excludes