Which of the Following Statements Is True of Current Ratio

question 34

Multiple Choice

Which of the following statements is true of current ratio?

• A) The larger a firm's current ratio, the harder it is for the firm to pay its short-term debts.
• B) The current ratio is a type of leverage ratio.
• C) A current ratio that is below 1.0 signifies a company's inability to pay its short-term liabilities with its current assets.
• D) The current ratio is computed by dividing a firm's current liabilities by its current assets.

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