All of the Following Regarding the Current Ratio Are True

Multiple Choice

All of the following regarding the current ratio are true except:

A) Current ratio is calculated by dividing current assets by current liabilities.
B) Current ratio can reveal challenges in covering short-term obligations if it is less than 1.
C) Current ratio can affect a creditor's decision about whether to lend money to a company.
D) Current ratio does not affect a creditor's decision on whether to allow a company to buy on credit.
E) Current ratio helps to assess a company's ability to pay its debts in the near future.