The best financial ratio to determine a company's ability to pay debt as it comes due is the debt ratio.

Question

Quizplus · Accepted Answer

The best financial ratio to determine a company's ability to pay debt as it comes due is the current ratio. The current ratio compares a company's current assets to its current liabilities, giving an indication of its ability to pay its short-term debts. The debt ratio compares a company's total debt to its total assets, and while it can give an indication of overall debt burden, it does not specifically focus on the ability to pay debt as it comes due.

The Best Financial Ratio to Determine a Company's Ability to Pay