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      Question

      Which ratio measures a company's ability to meet its

      short-term obligations?
      A Debt-Equity Ratio Correct Answer Incorrect Answer
      B Current Ratio Correct Answer Incorrect Answer
      C Return on Equity Correct Answer Incorrect Answer
      D Gross Profit Ratio Correct Answer Incorrect Answer

      Solution

      Current Ratio = Current Assets Γ· Current Liabilities. It indicates the company's liquidity position and ability to pay short-term debts.

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