The correct answer is: A. Current ratio
The current ratio is a liquidity ratio that measures a company’s ability to pay its short-term obligations. It is calculated by dividing a company’s current assets by its current liabilities. A current ratio of 2:1 or higher is generally considered to be healthy.
The quick ratio is a liquidity ratio that measures a company’s ability to pay its short-term obligations without relying on the sale of inventory. It is calculated by dividing a company’s quick assets by its current liabilities. Quick assets are current assets that are easily converted into cash, such as cash, marketable securities, and accounts receivable. A quick ratio of 1:1 or higher is generally considered to be healthy.
The liquid ratio is a liquidity ratio that measures a company’s ability to pay its short-term obligations using only the most liquid assets. It is calculated by dividing a company’s cash and marketable securities by its current liabilities. A liquid ratio of 0.5:1 or higher is generally considered to be healthy.
The debt-equity ratio is a financial ratio that measures a company’s financial leverage. It is calculated by dividing a company’s total debt by its total equity. A debt-equity ratio of 1:1 or higher is generally considered to be high.
In conclusion, the current ratio is the only ratio that is also known as working capital ratio.