The Purpose of the Current Ratio Is to Evaluate the Firm's

question 42

Multiple Choice

The purpose of the current ratio is to evaluate the firm's ability to:

• A)Generate sales with a given level of current assets.
• B)Utilize current assets profitably.
• C)Pay its bills in the short run.
• D)Effectively use borrowed funds.

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Definitions:

Micro-

A prefix meaning small or minute, often used in scientific terms to denote a factor of one millionth.

Small

Of a size that is less than normal or usual; the term is relative and can be used in various contexts to denote physical size.

Auto-

A prefix meaning self or same, used in terms that denote self-action, such as autoimmunity.

Self

The total, essential, or particular being of a person; the individual.