The Current Ratio Measures ________

question 204

Multiple Choice

The current ratio measures ________.

• A) a company's ability to sell its long-term assets
• B) a company's ability to pay current liabilities from its total assets
• C) a company's ability to pay current liabilities from current assets
• D) a company's profitability during a particular period

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Definitions:

Pro Forma Statements

Financial statements that project the future financial performance of a company, often used in planning and capital raising.

Aggregated Statements

These are financial statements that combine the financial data of several segments, subsidiaries, or different time periods of an organization into a single, comprehensive financial statement.

Percentage of Sales Approach

A financial planning model that estimates changes in balance sheet and income statement items as a direct percentage of changes in sales.