Choose the Correct Explanation for the Current Ratio

question 9

Multiple Choice

Choose the correct explanation for the current ratio.

• A)A measure of a business's ability to pay debts and obligations due beyond 1 year
• B)A measure of a business's ability to pay debts and obligations due within 2 years
• C)A measure of a business's ability to pay debts and obligations due within 1 year
• D)A measure of a business's ability to pay debts and obligations due within 1 year,excluding the value of inventory and prepaid expenses

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Definitions:

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan amount.

Full Amount

The total quantity or extent of something, typically referring to the complete sum of money owed or due.

Repaid

The process of repaying funds that were once loaned by a creditor.

Borrowed

The act of receiving funds from another party with the promise to return the principal amount along with interest or other charges.