IIA-CIA-PART2 · Question #362
Which of the following represents a ratio that measures short term debt-paying ability?
The correct answer is C. Current ratio. The current ratio is a financial metric that measures a company's ability to pay short-term obligations with its current assets. It is calculated by dividing current assets by current liabilities. This ratio provides insight into the liquidity and short-term debt-paying ability…
Question
Which of the following represents a ratio that measures short term debt-paying ability?
Options
- ADebt-to-equity ratio.
- BProfit margin.
- CCurrent ratio.
- DTimes interest earned.
How the community answered
(22 responses)- A5% (1)
- C91% (20)
- D5% (1)
Explanation
The current ratio is a financial metric that measures a company's ability to pay short-term obligations with its current assets. It is calculated by dividing current assets by current liabilities. This ratio provides insight into the liquidity and short-term debt-paying ability of a company, making it a key indicator for assessing financial health and stability in the short term.
Topics
Community Discussion
No community discussion yet for this question.