Which ratio would you use to examine a company's ability to pay its debts in the short- term?
A)Earnings per share
B)Debt to assets ratio
C)Return on equity
D)Acid-test ratio

Question

Quizplus · Accepted Answer

The acid-test ratio, also known as the quick ratio, measures a company's ability to pay its short-term debts using only its most liquid assets, such as cash and accounts receivable. This ratio is a good indicator of a company's ability to meet its immediate financial obligations, without having to sell off inventory or other assets.

Which Ratio Would You Use to Examine a Company's Ability