The ____ provides a good indication of the firm's ability to meet its current obligations.
A) debt ratio
B) profit margin
C) days sales outstanding
D) quick ratio
E) return on equity

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, measures a company's ability to pay off its current liabilities with its current assets (excluding inventory). A high quick ratio indicates that the company has enough liquid assets to cover its short-term obligations, which is a positive sign of its financial stability.

The ____ Provides a Good Indication of the Firm's Ability