alleryStart learning →The current ratio represents current assets divided by:
ALong-term debt
BAnnual dividends
CCurrent liabilities
DTotal revenues
Answer & Solution
Correct answer: C. Current liabilities
1. The current ratio is a division of two balance sheet figures.
2. The current ratio is closely related to working capital.
3. It represents the current assets divided by current liabilities.
4. Both figures are short-term items.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 6 'Measures of Financial Health'_
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