Which ratio would you use to examine a company's ability to pay its debts in the short-term?
A)Earnings per share
B)Acid-test ratio
C)Debt to assets ratio
D)Return on equity

Question

Quizplus · Accepted Answer

The quick ratio,also known as the acid-test ratio,is a conservative variation of the current ratio.The quick ratio measures a company's immediate debt-paying ability.Only cash,receivables,and current marketable securities (quick assets)are included in the numerator.

Which Ratio Would You Use to Examine a Company's Ability