A retailer can best measure its liquidity by evaluating its ________.
A) collection period
B) return on net sales ratio
C) accounts payable to net sales ratio
D) quick ratio

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, measures a retailer's ability to quickly convert its current assets into cash to meet its short-term obligations. This ratio is a better indicator of liquidity than the collection period, return on net sales ratio, or accounts payable to net sales ratio as it focuses on the retailer's ability to pay its immediate debts.

A Retailer Can Best Measure Its Liquidity by Evaluating Its