The current ratio is a measure of:
A)Solvency.
B)Liquidity.
C)Equity.
D)Profitability.

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It compares current assets to current liabilities, with a higher ratio indicating that a company has more current assets available to meet its short-term obligations. Solvency refers to a company's ability to meet long-term obligations, equity to the ownership interest of shareholders, and profitability to a company's ability to generate profit.

The Current Ratio Is a Measure Of