Asked by Osama Al-bahnasi on May 28, 2024
Verified
The current ratio
A) is calculated by dividing total assets by total liabilities.
B) takes into account the composition of current assets.
C) takes into account the composition of current assets and current liabilities.
D) is calculated by dividing current assets by current liabilities.
Current Ratio
A liquidity ratio that measures a company's ability to pay short-term obligations, calculated as current assets divided by current liabilities.
Current Liabilities
Short-term financial obligations that are due to be paid within one fiscal year or the operating cycle, whichever is longer.
- Determine and analyze the liquidity of a company using ratios such as the current ratio.
Verified Answer
KH
Kaija HedmanJun 02, 2024
Final Answer :
D
Explanation :
The current ratio is calculated by dividing current assets by current liabilities, which measures a company's ability to pay off its short-term liabilities with its short-term assets.
Learning Objectives
- Determine and analyze the liquidity of a company using ratios such as the current ratio.