which of the following financial ratios measures the ability of the organization to pay its short-term debts?
Current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. Use a company's current ratio to evaluate its short-term financial strength. The liquidity ratio expresses a company's ability to repay short-term creditors out of its total cash. The liquidity ratio is the result of dividing the total cash by short-term borrowings.