Current Ratio

Question 1

________ is a liquidity and efficiency ratio that measures a firm’s ability to pay off its short-term liabilities with its current assets

Answer 1

CURRENT RATIO

Question 2

What is the formula for Current Ratio

Answer 2

CURRENT RATIO=

CURRENT ASSETS/ CURRENT LIABILITIES

Question 3

______ requires that companies separate current and long term assets and liabilities are on the balance sheet

Answer 3

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)

Question 4

The ______ helps investors and creditors understand the liquidity of a company and easily that company will be able to pay off its current liabilities

Answer 4

CURRENT RATIO

Question 5

TRUE OR FALSE. A (lower) current ratio is always more favorable then a higher current ratio because it shows that the company can make current debt payments more easily

Answer 5

FALSE. (HIGHER)

Question 6

________ also called activity ratios measure how well companies utilize their assets to generate income

Answer 6

EFFICIENCY RATIOS