Answer
b
Work Step by Step
The current ratio compares assets that can be converted to cash in the short term to debts payable in the short term, so it is an indication of the company's ability to pay their short term debts.
Accounting: Tools for Business Decision Making, 5th Edition
by Kimmel, Paul D.; Weygandt, Jerry J.; Kieso, Donald E.
Published by
Wiley
ISBN 10:
1118128168
ISBN 13:
978-1-11812-816-9
Chapter 2 - A Further Look at Financial Statements - Self-Test Questions - Page 73: 8
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