Which of the ratios listed helps to indicate whether a company has enough short-term assets to cover its short-term liabilities?
A) current ratio
B) profit margin
C) debt-to-equity
D) return on assets.

Question

Quizplus · Accepted Answer

The current ratio measures the company's ability to pay off its short-term liabilities using its current assets. A higher current ratio indicates that the company has sufficient current assets to cover its current liabilities. Therefore, the current ratio is the best ratio to indicate whether a company has enough short-term assets to cover its short-term liabilities.

Which of the Ratios Listed Helps to Indicate Whether a Company