How "Current Ratio" is calculated? 1. Current Assets/Current Liabilities or 2. Current Liabilities/Current Assets

Current Ratio = Current Assets / Current Liabilities

Current Assets/Current Liabilities Current ratio is the ratio of current assets of a business to its current liabilities.
It is the most widely used test of liquidity of a business and measures the ability of a business to repay its debts over the period of next12 months.

CURRENT ASSETS/CURRENT LIABILITIES

current ratio=current assets/current liabilites also usefull acid ratio=(cash +Accont receivable+short-term investment)/current liabilities

1.
Current Assets/Current Liabilities

current assets /current liabilities

Current Ratio = Current Assets/ Current Liabilities. The answer is option1.

Option2.
It is most significant ones, which determine the company's ability to pay its debt on maturity.

Option one is the right answer.