The Current Ratio Is a Measure of Profitability

question 87

True/False

The current ratio is a measure of profitability.

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Definitions:

Quick Ratio

The Quick Ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets, excluding inventory.

Marketable Securities

Financial instruments that can be easily converted into cash, often used for short-term investments.

Accounts Payable

Money owed by a company to its creditors for goods or services that have been delivered or used, but not yet paid for.

Accounts Receivable Turnover

A financial ratio that indicates how efficiently a company collects its receivables or the money owed by customers, calculated by dividing net credit sales by average accounts receivable.