Dilma, a finance manager at FinTel Inc., needs to understand the current financial position of the company in terms of meeting its short-term financial obligations. Dilma must calculate the _____ to accomplish this task.
A) debt ratio
B) asset turnover
C) return on assets
D) inventory turnover
E) acid test ratio

Question

Quizplus · Accepted Answer

In order to assess the company's ability to meet short-term financial obligations, Dilma would need to calculate the acid test ratio, which measures a company's ability to pay off its current liabilities with its current assets, excluding inventory. A high acid test ratio indicates greater liquidity and a stronger ability to meet short-term obligations. The other options listed do not specifically focus on short-term financial obligations.

Dilma, a Finance Manager at FinTel Inc