A business's current assets divided by its current liabilities is equal to its
A) current ratio.
B) working capital.
C) current net income.
D) current equity.

Question

Quizplus · Accepted Answer

The ratio of current assets to current liabilities is known as the current ratio. It measures a company's liquidity and ability to pay off its short-term debts with its current assets. A higher current ratio is generally considered better as it indicates that the company has more assets available to cover its liabilities. Working capital is the difference between current assets and current liabilities, while current net income and current equity are not directly related to the current ratio.

A Business's Current Assets Divided by Its Current Liabilities Is