Which equation expresses the Current Ratio?

• A. Current Liabilities / Current Assets
• B. Quick Ratio (Current Assets minus Inventory) / Current Liabilities
• C. Total Assets / Total Liabilities
• D. Current Assets / Current Liabilities

Answer: (D)

The current ratio is a liquidity measure that shows how well a company can cover its short-term obligations with assets expected to be converted to cash within the year. It is calculated by dividing current assets by current liabilities. Therefore, current assets divided by current liabilities is the expression that matches this concept.

Other forms don’t fit because they mix different ideas: reversing the ratio (liabilities over assets) would misstate liquidity; the quick ratio uses (current assets minus inventory) over current liabilities, making it a stricter measure; and total assets over total liabilities reflects overall solvency, not short-term liquidity.