Which of the following is a stringent measure of a company's ability to repay obligations in a short period of time?
A)Return on total assets
B)Current ratio
C)Acid-test ratio
D)Debt turnover

Question

Quizplus · Accepted Answer

The acid-test ratio, also known as the quick ratio, measures a company's ability to meet its short-term obligations with its most liquid assets (such as cash, accounts receivable, and marketable securities) without relying on inventory. This ratio provides a more stringent measure of liquidity than the current ratio, which includes inventory in its calculation. Therefore, option C is the best choice.

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