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Current Ratio is calculated as
ACurrent Assets ÷ Current Liabilities
BQuick Assets ÷ Current Liabilities
CCurrent Assets ÷ Total Assets
DNet Profit ÷ Sales
Answer & Solution
Correct answer: A. Current Assets ÷ Current Liabilities
1. Current Ratio measures short-term solvency.
2. Formula: Current Assets / Current Liabilities.
3. An ideal ratio is around 2:1; below 1 signals liquidity risk.
4. Hence (A) is correct.
_Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 9 "Analysis of Financial Statements", §9.1 ¶§9.1_
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