The current ratio is O a solvency measure that indicates the margin of safety for bondholders O calculated by dividing current liabilities by current assets O calculated by subtracting current liabilities from current assets O used to evaluate a company's liquidity and short-term debt-paying ability
The current ratio is O a solvency measure that indicates the margin of safety for bondholders O calculated by dividing current liabilities by current assets O calculated by subtracting current liabilities from current assets O used to evaluate a company's liquidity and short-term debt-paying ability
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter12: The Statement Of Cash Flows
Section: Chapter Questions
Problem 12.24MCE
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Introduction: The current ratio is a liquidity ratio used to evaluate a company's ability to pay short-term or one-year obligations. It shows to investors and analysts how a company might utilize its current assets on its balance sheet to pay down current debt and other payables.
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