In corporate liquidity management, what does the current ratio (tokovni količnik) measure?
Answer and explanation
Correct answer: D. A firm's ability to cover its short-term obligations with its short-term assets
- Step 1: The current ratio (Current Assets divided by Current Liabilities) measures short-term liquidity, indicating whether a business has sufficient liquid assets to settle debts due within one year. Answer: A firm's ability to cover its short-term obligations with its short-term assets. Why not the others: Dividend payout ratio measures dividend distribution, inventory turnover measures stock velocity, and ROE measures equity return.
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