Chun-Mei has just reviewed a number of indicators of financial control.The one that troubles her indicates that the company may have trouble meeting its short-term financial obligations.Chun-Mei is concerned about
A)the profit and loss statement.
B)the profitability ratio.
C)a leverage ratio.
D)the current ratio.
E)the return on investment ratio.

Question

Quizplus · Accepted Answer

The current ratio measures a company's ability to pay its short-term debts by comparing its current assets to its current liabilities. If the ratio is less than 1, it indicates that the company may have trouble meeting its short-term financial obligations. Therefore, Chun-Mei's concern is related to the current ratio.

Chun-Mei Has Just Reviewed a Number of Indicators of Financial