The formula to compute the current ratio is
A)(cash + short-term investments + net current liabilities)/current liabilities.
B)(current liabilities +short-term investments + net current receivables)divided by current assets.
C)current liabilities/current assets.
D)current assets/current liabilities.

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. This gives an indication of a company's ability to meet its short-term obligations using its current assets. Option D is the only choice that correctly reflects this formula.

The Formula to Compute the Current Ratio Is