A: The Current Ratio is a liquidity ratio. R: It measures the ability to pay off long-term debts. Choose the correct option. MCQ with Answer and Explanation
A: The Current Ratio is a liquidity ratio. R: It measures the ability to pay off long-term debts. Choose the correct option.
A. Both A and R are true and R is the correct explanation of A
B. A is true but R is false
C. A is false but R is true
D. Both A and R are true but R is NOT the correct explanation of A
Answer: Option B
Solution (By JKSSB Mock Tests)
The Current Ratio is indeed a liquidity ratio. However, it measures short-term liquidity (ability to pay current liabilities), not long-term debts (which is measured by solvency ratios like Debt-Equity). A is true, R is false.
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