Series 79 practice questioneasyFinancial Ratio Interpretation
A company’s current ratio is calculated as:
- ATotal Assets ÷ Total Liabilities
- BCurrent Assets ÷ Current Liabilities✓ Correct answer
- CNet Income ÷ Revenue
- DLong-term Debt ÷ Total Equity
Explanation
Why B — Current Assets ÷ Current Liabilities
The current ratio is current assets divided by current liabilities, measuring short-term liquidity. The other formulas relate to different financial analysis ratios.
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