The current ratio helps users determine if a company can meet its near-term obligations.

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay off its short-term obligations. It compares a company's current assets to its current liabilities. A high current ratio indicates that a company has enough current assets to meet its short-term obligations, while a low current ratio suggests that a company may have difficulty paying off its near-term debts. Therefore, the current ratio helps users determine if a company can meet its near-term obligations.

The Current Ratio Helps Users Determine If a Company Can