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Which of the following financial ratios shows the company's liquidity?

A.
Debt to equity ratio
B.
Current ratio
C.
Debt ratio
D.
Return on equity

1 Answer

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The B) Current ratio shows the company's liquidity. The current ratio calculated by dividing company's amount of current asset by company's current liability. This ratio shows the ability of a company's current asset to meet its current liability. Managers usually use benchmarks for the similar industry in analyzing this ratio.
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