Accounting for IGCSE & O level - Advanced Principles (Section 6 - No. 47)
In the context of the text, what is a primary indicator of a company's ability to meet its short-term obligations?
Inventory turnover ratio
Current ratio
Debt-to-equity ratio
Net profit margin
Explication
The current ratio (and quick ratio) is designed to measure the ability of a business to pay its immediate and short-term debts.