Which of the following is the formula to compute the current ratio?
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 assets/current liabilities
D)Current liabilities/current assets

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing the current assets by the current liabilities. Option C is the only choice with this formula. Option A involves subtracting net current liabilities, which is not necessary for calculating the current ratio. Option B involves adding net current receivables, which is not included in the basic calculation for current ratio. Option D involves dividing current liabilities by current assets, which will give us the inverse of the current ratio.

Which of the Following Is the Formula to Compute the Current