The Current Ratio Is Used to Evaluate a Firm's Ability

question 1

True/False

The current ratio is used to evaluate a firm's ability to pay its short-term debts.

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Definitions:

U.S. GAAP

United States Generally Accepted Accounting Principles, a set of accounting rules used for financial reporting.

Book Value

The net value of a company's assets found on its balance sheet, often compared to its market value.

Extraordinary Item

An unusual and infrequent gain or loss that is reported separately in a company's financial statements to give a clearer picture of its regular income.

Operating Assets

Assets that are used by a business in its daily or regular operations to generate revenue, including cash, inventory, and property, plant, and equipment.