Which of the ratios listed helps to indicate whether current liabilities could be paid without having to sell the inventory?
A) Current ratio
B) Profit margin
C) Quick ratio
D) Return on assets

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, takes into account only the most liquid assets (cash, marketable securities, and accounts receivable) in relation to current liabilities. This ratio helps to indicate whether a company can pay off its current liabilities without relying on the sale of its inventory. A high quick ratio is typically seen as favorable as it suggests that the company has enough short-term assets to cover its immediate obligations.

Which of the Ratios Listed Helps to Indicate Whether Current