Current Ratio is calculated by which of the following formula?

Current Assets/Current Liabilities

The correct answer is option 3- Current Assets/Current Liabilities.

Current ratio is the proportion of current assets to current liabilities i.e. Current assets/Current Liabilities.

* Current assets include current investments, inventories, trade receivables (debtors and bills receivables), cash and cash equivalents, short-term loans and advances and other current assets such as prepaid expenses, advance tax and accrued income, etc.

* Current liabilities include short-term borrowings, trade payables (creditors and bills payables), other current liabilities and short-term provisions.