What Is the Purpose of Computing the Current Ratio

Multiple Choice

What is the purpose of computing the current ratio?

A) To provide investors with some measurement of the returns they can expect from their investment
B) To measure the extent to which a firm is financed through borrowed money
C) To measure how much cash the firm has
D) To measure the firm's ability to meet emergency demands for cash
E) To measure the firm's ability to meet its current obligations out of its current assets