The current ratio is calculated as:
A) Current assets divided by long-term assets.
B) Current assets divided by total assets.
C) Current assets divided by current liabilities.
D) Current assets divided by total liabilities.

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. This ratio is used to measure a company's ability to pay back its short-term debts with its short-term assets. Option C is the only choice that includes both current assets and current liabilities in the calculation.

The Current Ratio Is Calculated As