Which of the ratios listed helps to indicate whether current liabilities could be paid without having to sell the inventory?
A) Current ratio
B) Profit margin
C) Quick ratio
D) Debt to equity

Question

Quizplus · Accepted Answer

The quick ratio (also known as the acid-test ratio) only takes into account the most liquid assets, such as cash and accounts receivable, and excludes inventory. This ratio is specifically designed to indicate whether a company's current liabilities can be paid without having to sell inventory. Thus, it is the best choice for this question.

Which of the Ratios Listed Helps to Indicate Whether Current