At the end of the fiscal year for Santos Industrial Machinery, management raised concerns about the company's financial performance. The company's accountants have been asked to analyze the current financial state of the company by using ratio analysis. Santos's executives are most interested in seeing the company's short-term solvency ratios. Based on this information, what question do they most likely want to have answered?
A) Can the company pay its immediate debts without obtaining further loans?
B) Does the company have enough inventory to meet sales demands?
C) How much inventory on hand does Santos have?
D) How much bonds payable debt is Santos carrying?
E) Is the company selling products at an appropriate price?

Question

Quizplus · Accepted Answer

Short-term solvency ratios, also known as liquidity ratios, measure a company's ability to meet its immediate debt obligations without relying on additional borrowing or selling assets. Therefore, Santos's executives are most likely interested in knowing if their company can pay its immediate debts without obtaining further loans, which is answered by the short-term solvency ratios. Option A is the only choice that addresses this question.

At the End of the Fiscal Year for Santos Industrial