GENERAL KNOWLEDGE

Detailed explanation-1: -Current ratio is a comparison of current assets to current liabilities, calculated by dividing your current assets by your current liabilities. Potential creditors use the current ratio to measure a company’s liquidity or ability to pay off short-term debts.

Detailed explanation-2: -The current ratio indicates a company’s ability to meet its short-term obligations. Those obligations are typically paid for using current assets. The ratio’s calculated by dividing current assets by current liabilities. An asset is considered current if it can be converted into cash within a year or less.

Detailed explanation-3: -Answer and Explanation: The answer is true. The current ratio is a balance of assets and liabilities.