Asked by
Gracie Hopkins
on Nov 13, 2024Verified
A weakness of the current ratio is
A) the difficulty of the calculation.
B) that it doesn't take into account the composition of the current assets.
C) that it is rarely used by sophisticated analysts.
D) that it can be expressed as a percentage as a rate or as a proportion.
Current Assets
Assets that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle of a business, whichever is longer.
Current Ratio
A financial metric that compares a company's current assets to its current liabilities, indicating liquidity levels.
- Become adept at calculating current and quick (acid-test) ratios to appraise a company's immediate financial liquidity.
Verified Answer
RC
Learning Objectives
- Become adept at calculating current and quick (acid-test) ratios to appraise a company's immediate financial liquidity.