Which of the following would be useful in determining whether a company can pay its current liabilities?
A)Quick ratio
B)Current ratio
C)Debt ratio
D)Both A and B

Question

Quizplus · Accepted Answer

Both the quick ratio and current ratio would be useful in determining whether a company can pay its current liabilities. The quick ratio measures a company's ability to pay off its current liabilities using its most liquid assets, while the current ratio measures a company's ability to pay off its current liabilities using its current assets. Using both ratios can provide a clearer picture of a company's ability to meet its short-term obligations. The debt ratio, while useful in understanding a company's leverage, does not specifically address its ability to pay off current liabilities.

Which of the Following Would Be Useful in Determining Whether