A bank is concerned because they feel that a firm will not be able to raise enough cash to pay bills that are due within the next year.What ratio are they most likely to examine to address this concern?

Question

Quizplus · Accepted Answer

The most appropriate ratio to assess a firm's ability to pay off short-term debts is the current ratio, which can be calculated as current assets divided by current liabilities. A current ratio of less than 1 indicates that a firm may not be able to pay its current liabilities with its current assets.

A Bank Is Concerned Because They Feel That a Firm