Which of the following two ratios measure the short-term solvency of a company?
A)Current Ratio and Times Interest Earned
B)Quick Ratio and Current Ratio
C)Quick Ratio and Accounts Receivable Turnover
D)Accounts Payable Turnover and Inventory Turnover

Question

Quizplus · Accepted Answer

The two ratios that measure the short-term solvency of a company are the Quick Ratio and Current Ratio. The Quick Ratio measures the company's ability to pay its short-term debts using its most liquid assets, while the Current Ratio measures the company's ability to pay its short-term debts using all current assets. Both ratios give an idea of how easily a company can pay off its short-term obligations. The other ratios listed are used to measure other aspects of a company's financial health.

Which of the Following Two Ratios Measure the Short-Term Solvency