Question

how is the current ratio calculated?
dividing current assets by current liabilities
subtracting current assets from current liabilities
multiplying current assets by current liabilities

Explanation:

The current ratio is a financial ratio used to assess a company's short - term liquidity. By definition, the formula for calculating the current ratio is $\text{Current Ratio}=\frac{\text{Current Assets}}{\text{Current Liabilities}}$, which means we divide current assets by current liabilities. Subtracting or multiplying current assets and current liabilities does not give the current ratio.

Answer:

A. dividing current assets by current liabilities