The current ratio is a type of ________ ratio.
A) leverage
B) profitability
C) activity
D) liquidity

Question

Quizplus · Accepted Answer

The current ratio is a measure of a company's liquidity, or its ability to pay off short-term debts and obligations. It is calculated by dividing current assets by current liabilities. A current ratio of 1 or higher indicates that a company has enough current assets to cover its current liabilities. Therefore, the current ratio is a type of liquidity ratio.

The Current Ratio Is a Type of ________ Ratio