Asked by Madeline Boutot on May 07, 2024
Verified
The current ratio is used to help assess a company's ability to pay its debts in the near future.
Current Ratio
A financial metric used to evaluate a company's ability to pay off its short-term liabilities with its short-term assets.
- Understand the concept of the current ratio and its significance in assessing a company’s liquidity.
Verified Answer
SF
st fort SchilerMay 13, 2024
Final Answer :
True
Explanation :
The current ratio is a liquidity ratio that measures a company's ability to pay its short-term liabilities using its current assets, which are assets that can be easily converted into cash within the next 12 months. Therefore, it helps assess a company's ability to pay its debts in the near future.
Learning Objectives
- Understand the concept of the current ratio and its significance in assessing a company’s liquidity.