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

Question

Quizplus · Accepted Answer

Asset turnover is a measure of how efficiently a company utilizes its assets to generate revenue, and is therefore more useful for evaluating a company's long-term solvency rather than its ability to pay short-term debts. Short-term creditors would be more interested in liquidity ratios like the current ratio and acid-test ratio, as well as the company's accounts receivable turnover.

Which One of the Following Ratios Would Not Likely Be