Question

The current ration measures_________.

-a company's profitability during a particular period
-a company's ability to pay current liabilities from its total assets
-a company's ability to sell its long term assets
-a company's ability to pay current liabilities from its current assets

Answer 1

The current ration measures D. a company's ability to pay current liabilities from its current assets.

What is current ratio?

The current ratio is a financial metric used to assess a company's short-term liquidity and its ability to cover its current obligations (liabilities) using its current assets.

It provides insights into a company's ability to meet its short-term financial commitments and is calculated by dividing current assets by current liabilities. A higher current ratio generally indicates a better ability to meet short-term financial obligations.