Which of the following does the current ratio measure?
A) The company's overall ability to pay liabilities
B) The company's ability to pay current liabilities with current assets
C) The proportion of the company's assets that are financed with debt
D) The company's rate of cash flow

Question

Quizplus · Accepted Answer

The current ratio measures the company's ability to pay current liabilities (those due within one year) with its current assets (those expected to be converted to cash within one year). A higher current ratio indicates a greater ability to meet short-term obligations.

Which of the Following Does the Current Ratio Measure