Which of the following ratios is used to assess a company's ability to meet its

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Question: Which of the following ratios is used to assess a company\'s ability to meet its short-term obligations?

Options:

Correct Answer: Current Ratio

Solution:

The Current Ratio is used to assess a company\'s ability to meet its short-term obligations.

Which of the following ratios is used to assess a company's ability to meet its short-term obligations?

Which of the following ratios is used to assess a company's ability to meet its short-term obligations?

Step 1: Understand what short-term obligations are. These are debts or payments that a company needs to pay within a year.
Step 2: Learn about financial ratios. These are tools used to evaluate a company's financial health.
Step 3: Identify the Current Ratio. This ratio compares a company's current assets to its current liabilities.
Step 4: Know that the Current Ratio formula is: Current Ratio = Current Assets / Current Liabilities.
Step 5: Realize that a higher Current Ratio means the company is better able to pay its short-term obligations.

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