Question

An investor knows the total assets and total liabilities of a company, but they are not sure how much of the assets and liabilities are current versus long-term. Based on this, the investor could calculate

Answer 1

Answer:

The investor must find Current Ration and Quick Ratio.

Explanation:

The reason is that the current ratio tells that how much of the current assets are financed from the current liabilities. This gives a better understanding of the financing of the working capital through current liabilities. The quick ratio does the same but the effect of the inventory is eliminated.