Which of the following depicts the current ratio?
A)Current assets - inventory) ÷ current liabilities
B)Currents assets ÷ total assets
C)Current assets - inventory) ÷ total assets
D)Current assets ÷ current liabilities

Question

Quizplus · Accepted Answer

The current ratio is a liquidity ratio that measures a company’s ability to pay off its short-term liabilities with its short-term assets. It is calculated by dividing the company’s current assets by its current liabilities. Choice D is the only option that correctly represents this calculation.

Which of the Following Depicts the Current Ratio