The ratios that are used to determine a company's short-term debt paying ability are
A) asset turnover, times interest earned, current ratio, and account receivable turnover.
B) times interest earned, inventory turnover, current ratio, and accounts receivable turnover.
C) times interest earned, quick ratio, current ratio, and inventory turnover.
D) current ratio, quick ratio, accounts receivable turnover, and inventory turnover.

Question

Quizplus · Accepted Answer

The ratios used to determine a company's short-term debt paying ability are those that focus on the company's liquidity. Current ratio and quick ratio measure the company's ability to pay its current liabilities using its current assets. Accounts receivable turnover and inventory turnover measure how quickly the company turns its inventory and receivables into cash. These ratios provide insight into the company's ability to generate cash to meet its current liabilities.

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