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 calculated by dividing current assets by current liabilities. This ratio provides an idea of a company's ability to pay off its short-term liabilities with its short-term assets. A ratio of greater than 1 indicates that a company has more current assets than current liabilities, which is generally deemed to be a good sign.

The Current Ratio Is Measured As