which of the following explains why a business calculates its current ratio? to evaluate its profitability…
which of the following explains why a business calculates its current ratio? to evaluate its profitability to evaluate its liquidity to determine the initial stock price to determine whether it is creditworthy
Answer
Brief Explanations:
The current ratio is calculated as current assets divided by current liabilities. It measures a company's ability to pay short - term obligations, which is related to liquidity. Profitability is measured by ratios like net profit margin. Initial stock price is determined by factors like market demand and company valuation. Creditworthiness is a broader concept often assessed by multiple factors and not directly by the current ratio.
Answer:
To evaluate its liquidity