A retailer considering undertaking significant additional debt to finance a regional expansion needs to carefully evaluate its _____.
A)collection period
B)quick ratio
C)accounts payable to net sales
D)return on net sales

Question

Quizplus · Accepted Answer

The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. This is especially important when considering taking on additional debt, as it signifies whether the company has enough cash and other liquid assets to cover their immediate liabilities. A low quick ratio may indicate that the company will have difficulty paying off its debt obligations in the short term. Therefore, evaluating the quick ratio is critical when making a decision about taking on additional debt for expansion.

A Retailer Considering Undertaking Significant Additional Debt to Finance a Regional