Question:
In financial ratios, the Current Ratio is:
In financial ratios, the Current Ratio is:
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Current Ratio high = good liquidity = less risk of default.
Updated On: Jul 3, 2025
- Current Assets / Current Liabilities
- Current Liabilities / Current Assets
- Total Assets / Total Liabilities
- Total Liabilities / Total Assets
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The Correct Option is A
Solution and Explanation
The Current Ratio checks if a firm can pay its short-term debts with its short-term assets. A ratio above 1 is good — it means the firm can pay current liabilities easily. It’s a key measure of liquidity.
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