Series 79 practice questioneasyAdvanced Financial Analysis
Which metric best measures a company’s ability to meet its short-term obligations?
- AGross margin
- BEBITDA margin
- CCurrent ratio✓ Correct answer
- DAsset turnover
Explanation
Why C — Current ratio
The current ratio (current assets divided by current liabilities) reflects short-term liquidity. Using profitability or efficiency ratios instead would not provide insight into liquidity risk.
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