Which of the following ratios is a measure of a company's ability to pay all current liabilities if they come due immediately?
A) The inventory turnover ratio is a measure of a company's ability to pay all current liabilities if they come due immediately.
B) The current ratio is a measure of a company's ability to pay all current liabilities if they come due immediately.
C) The acid-test ratio is a measure of a company's ability to pay all current liabilities if they come due immediately.
D) Both B and C are measures of a company's ability to pay all current liabilities if they come due immediately.

Question

Quizplus · Accepted Answer

The acid-test ratio, also known as the quick ratio, measures a company's ability to pay its current liabilities without relying on the sale of inventory, thus providing a more immediate assessment of liquidity.

Which of the Following Ratios Is a Measure of a Company's