The correct answer is: B. Current Liabilities
Current ratio is a liquidity ratio that measures a company’s ability to pay off its short-term obligations. It is calculated by dividing current assets by current liabilities.
Current assets are assets that are expected to be converted into cash or used up within one year. Examples of current assets include cash, accounts receivable, inventory, and short-term investments.
Current liabilities are liabilities that are due within one year. Examples of current liabilities include accounts payable, short-term notes payable, and accrued expenses.
A high current ratio indicates that a company has a good ability to pay off its short-term obligations. A low current ratio indicates that a company may have difficulty paying off its short-term obligations.
Option A: Current Profit is not a relevant measure for current ratio. Current profit is the net income of a company for a specific period of time. It is not a measure of a company’s liquidity.
Option B: Current Liabilities is the correct answer. Current liabilities are the liabilities of a company that are due within one year. They are a measure of a company’s short-term obligations.
Option C: Fixed Assets are assets that are not expected to be converted into cash or used up within one year. Examples of fixed assets include land, buildings, and equipment. Fixed assets are not a relevant measure for current ratio.
Option D: Equity Share Capital is the total amount of money that has been invested in a company by its shareholders. It is not a relevant measure for current ratio.