Which financial ratio is computed by dividing current assets by current liabilities?
A) quick ratio
B) debt to equity
C) accounts receivable turnover
D) current ratio

Question

Quizplus · Accepted Answer

The current ratio measures a company's ability to pay its short-term liabilities with its short-term assets. It is computed by dividing current assets by current liabilities. A higher current ratio indicates better liquidity and financial stability.

Which Financial Ratio Is Computed by Dividing Current Assets by Current