If Reebok wanted to know how quickly it could convert its assets to cash in order to pay off short-term debts, which ratio would it use?
A) current assets ÷ current liabilities
B) total liabilities ÷ total owner's equity
C) net revenue after taxes ÷ revenue
D) sales ÷ total assets

Question

Quizplus · Accepted Answer

The ratio that Reebok would use to determine how quickly it can convert its assets to cash in order to pay off short-term debts is the current ratio. This ratio is calculated by dividing the company's current assets by its current liabilities. A higher current ratio indicates that a company has a better ability to meet its short-term obligations.

If Reebok Wanted to Know How Quickly It Could Convert