Which one of the following ratios would not likely be used by a short-term creditor in evaluating whether to sell on credit to a company?
A) Current ratio
B) Inventory turnover
C) Asset turnover
D) Accounts receivable turnover

Question

Quizplus · Accepted Answer

Asset turnover is a measure of a company's efficiency in using its assets to generate revenue, which is more relevant for long-term creditors and investors. Short-term creditors are more concerned with a company's ability to pay its debts in the short term, which is why they would typically rely on ratios such as the current ratio, inventory turnover, and accounts receivable turnover.

Which One of the Following Ratios Would Not Likely Be