The current ratio is used to determine the percentage of sales revenue that is generated by new products, while the earnings per share ratio takes into account sales of both old and new products.

Question

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The current ratio measures a company's ability to pay its short-term debt obligations using its current assets. It has nothing to do with sales revenue generated by new products. Meanwhile, the earnings per share ratio gives information about a company's profitability by dividing its net income by the number of shares outstanding, regardless of whether the sales were from old or new products.

The Current Ratio Is Used to Determine the Percentage of Sales