Ratios: Working Capital and the Current Ratio Video Lessons

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Problem: The current ratio is a. calculated by dividing current liabilities by current assets. b. used to evaluate a company's liquidity and short-term debt paying ability. c. used to evaluate a company's solvency and long-term debt paying ability. d. calculated by subtracting current liabilities from current assets.

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Problem Details

The current ratio is

a. calculated by dividing current liabilities by current assets.

b. used to evaluate a company's liquidity and short-term debt paying ability.

c. used to evaluate a company's solvency and long-term debt paying ability.

d. calculated by subtracting current liabilities from current assets.

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Based on our data, we think this problem is relevant for Professor Lazerson's class at SJSU.