To compute the current ratio, current assets are divided by
A) debt.
B) current liabilities.
C) long-term assets.
D) owners' equity.
E) quick assets.

Question

Quizplus · Accepted Answer

Current ratio is a liquidity ratio and it measures the ability of a company to pay off its current liabilities with its current assets. Therefore, the current assets are divided by current liabilities to determine the current ratio.

To Compute the Current Ratio, Current Assets Are Divided by