The ratios that are used to determine a company's short-term debt paying ability are
A) asset turnover, interest coverage, current ratio, and receivables turnover.
B) interest coverage, inventory turnover, current ratio, and receivables turnover.
C) interest coverage, current ratio, and inventory turnover.
D) current ratio, receivables turnover, and inventory turnover.

Question

Quizplus · Accepted Answer

The current ratio, receivables turnover, and inventory turnover are all ratios that help assess a company's ability to meet its short-term obligations. The current ratio measures a company's ability to pay off its short-term liabilities with its short-term assets. Receivables turnover indicates how efficiently a company collects its accounts receivable. Inventory turnover shows how quickly a company sells and replaces its inventory. These are directly related to a company's short-term debt paying ability.

The Ratios That Are Used to Determine a Company's Short-Term