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

Question

Quizplus · Accepted Answer

The current ratio is most useful in evaluating a company's liquidity, as it measures the company's ability to meet its short-term obligations. It is calculated by dividing current assets by current liabilities. A higher current ratio indicates that the company is more capable of paying off its short-term debts.

For Which of the Following Is the Current Ratio Most