Question

One of the most widely used financial ratios is the current ratio.

True

False

Answer 1

CURRENT RATIO IS MOST WIDELY RATIO

THIS RATIO ASSESS THE OVERALL HEALTH OF A BUSINESS BASED ON ITS NEAR-TERM ABILITY TO KEEP UP WITH DEBT.

THE CURRENT RATIO COMPARES ALL OF A COMPANY’S CURRENT ASSETS TO ITS CURRENT LIABILITIES. THESE ARE USUALLY DEFINED AS ASSETS THAT ARE CASH OR WILL BE TURNED INTO CASH IN A YEAR OR LESS, AND LIABILITIES THAT WILL BE PAID IN A YEAR OR LESS.

THE CURRENT RATIO IS SOMETIMES REFERRED TO AS THE “WORKING CAPITAL” RATIO AND HELPS INVESTORS UNDERSTAND MORE ABOUT A COMPANY’S ABILITY TO COVER ITS SHORT-TERM DEBT WITH ITS CURRENT ASSETS.

SO THE STATEMENT IS TRUE