The ratio of current assets to current liabilities is known as:

Current Ratio:

• Current ratio is a financial metric that measures a company's ability to pay off its short-term liabilities (debts and payables) with its short-term assets (cash, inventory, receivables). It is expressed as:
• Formula: Current Ratio = Current Assets / Current Liabilities
• A higher current ratio indicates that the company has more than enough assets to cover its liabilities, showing financial stability in the short term.
• It helps investors and creditors assess the liquidity position of the company.

Solution:

The correct choice is: Option 2) Current ratio