Some of the ratios that are used to determine a company's short-term debt paying ability are
A)asset turnover, times interest earned, current ratio, and receivables turnover.
B)times interest earned, inventory turnover, current ratio, and receivables turnover.
C)times interest earned, current ratio, and inventory turnover.
D)current ratio, receivables turnover, and inventory turnover.

Question

Quizplus · Accepted Answer

The current ratio, receivables turnover, and inventory turnover are all measures that help in assessing a company's ability to meet its short-term obligations. The current ratio directly measures liquidity by comparing current assets to current liabilities. Receivables turnover indicates how quickly a company collects cash from its credit sales, and inventory turnover shows how efficiently a company manages its stock, both of which impact short-term liquidity.

Some of the Ratios That Are Used to Determine a Company's