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)Acid-test ratio
C)Asset turnover
D)Accounts receivable turnover

Question

Quizplus · Accepted Answer

Asset turnover ratio measures the efficiency of a company in using its assets to generate revenue. It is not as relevant for short-term creditors because they focus on the company's ability to pay its short-term debts, which is reflected in liquidity ratios like current and acid-test ratios, as well as accounts receivable turnover ratio.

Which One of the Following Ratios Would Not Likely Be