The current ratio is a liquidity ratio that measures a company's ability to pay its short-term obligations with its current assets. It is calculated by dividing current assets by current liabilities. Choice A correctly defines the current ratio as current assets divided by current liabilities.

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The Current Ratio Is

Question 77

Multiple Choice

The current ratio is

A) Current assets divided by current liabilities.
B) Cash and short-term investments divided by current liabilities.
C) Cash,short-term investments,and accounts receivable divided by current liabilities.
D) Cash,short-term investments,accounts receivable,and inventory divided by current liabilities.

Correct Answer: