The current ratio is used for which kind of evaluation?
A)The ability of a company to collect its receivables
B)The ability of a company to pay its current liabilities
C)Evaluating shares in a company from an investor's perspective
D)The overall profitability of a company

Question

Quizplus · Accepted Answer

The current ratio measures a company's ability to pay its current liabilities using its current assets. It is a liquidity ratio that evaluates a company's short-term solvency. A current ratio of 1 or higher is considered good because it indicates that a company can pay off its current liabilities with its current assets.

The Current Ratio Is Used for Which Kind of Evaluation