ObjectiveMcq
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The current ratio is calculated as:
Correct Answer: A — Current Assets / Current Liabilities
The correct answer is A: Current Assets / Current Liabilities.
The current ratio measures a company's ability to pay off its short-term liabilities using its short-term assets. A ratio above 1 indicates the company has more current assets than current liabilities, suggesting good short-term liquidity. A ratio below 1 may indicate potential liquidity problems.