Question

Which of the following measures a companys ability to pay its current liabilities? earnings per share inventory turnover tim

Which of the following measures a company's ability to pay its current liabilities? 

  • earnings per share 

  • inventory turnover 

  • times interest earned 

  • current ratio

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Answer #2

Answer: Option B, current ratio is correct.

The current ratio is the relationship between the current assets and current liabilities presented on the balance sheet of a business organization. It measures the ability of a business organization to pay its current obligations.

Current ratio \(=\frac{\text { Current assets }}{\text { Current liabilities }}\)

answered by: adidas
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Answer #1

Correct answer----current ratio.

.

Current ratio tells the ability of a company to pay current liabilities.

Times interest earned on the other hand tells ability to pay interest on debts of the company.

Inventory turnover tells the ability of a company to collect receivable and finally earning per share is just a ratio of how much a company earned on each share outstanding.

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