In assessing a firm's liquidity, which of the following ratios would be most helpful?
A)Debt/equity ratio
B)Asset turnover ratio
C)Current ratio
D)Times-interest-earned ratio

Question

Quizplus · Accepted Answer

The current ratio compares a firm's current assets to its current liabilities, providing a measure of the firm's ability to meet short-term obligations. This is an important measure of liquidity as it provides an indication of the firm's ability to cover its debts using its existing assets. The debt/equity ratio, asset turnover ratio, and times-interest-earned ratio are important measures of a firm's financial health, but are not directly related to liquidity.

In Assessing a Firm's Liquidity, Which of the Following Ratios