The current ratio is calculated by dividing
A) current assets by owners' equity.
B) current assets by current liabilities.
C) income by operating expenses.
D) net sales after taxes by net sales.
E) accounts receivable by inventory turnover.

Question

Quizplus · Accepted Answer

The current ratio is a measure of a company's ability to pay off its short-term liabilities with its current assets. It is calculated by dividing current assets by current liabilities. Therefore, the correct choice is B. Choices A, C, D, and E are incorrect as they do not involve the correct calculation for the current ratio.

The Current Ratio Is Calculated by Dividing