If management wishes to know the ability to pay off the upcoming debts of a business,they could use the:
A)debt to total assets.
B)current ratio
C)inventory turnover ratio.
D)times interest earned.

Question

Quizplus · Accepted Answer

The current ratio is the best choice as it measures a company's ability to pay off short-term debts with its short-term assets. It is calculated by dividing current assets by current liabilities. A higher ratio indicates better ability to meet short-term obligations.

If Management Wishes to Know the Ability to Pay Off