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    Question

    Which of the following financial ratios is most critical

    for assessing the creditworthiness of an MSME for working capital financing?
    A Current ratio Correct Answer Incorrect Answer
    B Price-to-earnings ratio Correct Answer Incorrect Answer
    C Dividend payout ratio Correct Answer Incorrect Answer
    D Debt-to-equity ratio Correct Answer Incorrect Answer
    E Return on equity Correct Answer Incorrect Answer

    Solution

    The current ratio, which measures the ability of an MSME to meet its short-term liabilities with its short-term assets, is crucial for assessing its liquidity and creditworthiness when applying for working capital financing.

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