What Is the Purpose of Computing the Current Ratio

question 128

Multiple Choice

What is the purpose of computing the current ratio?

• A) To provide investors with some measurement of the returns they can expect from their investment
• B) To measure the extent to which a firm is financed through borrowed money
• C) To measure how much cash the firm has
• D) To measure the firm's ability to meet emergency demands for cash
• E) To measure the firm's ability to meet its current obligations out of its current assets

---

Definitions:

Freedom

The freedom or right permitting one to carry out actions, express thoughts, or consider ideas in an uninhibited and unrestricted manner.

American Society

A broad concept encompassing the social structures, cultural norms, and collective behaviors of the people living in the United States.

Civil War

A conflict from 1861 to 1865 in the United States between the northern states (Union) and southern states (Confederacy) primarily over the issues of slavery and states' rights.

California

A U.S. state on the west coast, known for its diverse geography, significant economic contributions, and cultural impact.