Question: What is the formula for calculating the current ratio?
Options:
Current Assets / Current Liabilities
Current Liabilities / Current Assets
Total Assets / Total Liabilities
Total Liabilities / Total Assets
Correct Answer: Current Assets / Current Liabilities
Solution:
Current Ratio is calculated by dividing current assets by current liabilities.
What is the formula for calculating the current ratio?
Practice Questions
Q1
What is the formula for calculating the current ratio?
Current Assets / Current Liabilities
Current Liabilities / Current Assets
Total Assets / Total Liabilities
Total Liabilities / Total Assets
Questions & Step-by-Step Solutions
What is the formula for calculating the current ratio?
Step 1: Identify the current assets of the company. Current assets are things the company owns that can be converted to cash within one year, like cash, inventory, and accounts receivable.
Step 2: Identify the current liabilities of the company. Current liabilities are obligations the company needs to pay within one year, like accounts payable and short-term loans.
Step 3: Use the formula for the current ratio, which is: Current Ratio = Current Assets / Current Liabilities.
Step 4: Plug in the numbers you found for current assets and current liabilities into the formula.
Step 5: Calculate the result to find the current ratio.
No concepts available.
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