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What does the current ratio measure?

  1. A Short-term liquidity, as current assets divided by current liabilities
  2. B Long-term solvency
  3. C Profitability
  4. D Asset efficiency
Answer

Short-term liquidity, as current assets divided by current liabilities

The quick ratio excludes inventory as the least liquid current asset, giving a stricter view of immediate liquidity.

All CA MCQs

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