The current ratio is measured as:
A) Current assets minus current liabilities.
B) Current assets divided by current liabilities.
C) Current liabilities minus inventory, divided by current assets.
D) Cash on hand divided by current liabilities.
E) Current liabilities divided by current assets.

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. It is calculated by dividing current assets by current liabilities.

The Current Ratio Is Measured As