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State true or false with reasons.The current ratio measures the liquidity of the business. |
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Answer» This statement is True. The current ratio shows the relationship between current assets and current liabilities. If the proportion of current assets is higher than current liabilities, the liquidity position of the business entity is considered good. More liquidity means more short-term solvency. From the above, it is proved that the current ratio measures the liquidity of the business. |
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