The current ratio is
A)Current assets divided by current liabilities.
B)Cash and short-term investments divided by current liabilities.
C)Cash,short-term investments,and accounts receivable divided by current liabilities.

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. This is a measure of a company's ability to pay its short-term obligations with its current assets. Option A is the only choice that accurately represents this calculation. Options B and C include specific subsets of current assets, which would not provide an accurate representation of the company's overall liquidity.

The Current Ratio Is