Which of the following ratios is calculated to help determine the liquidity of a firm?
A)Inventory turnover ratio
B)Quick ratio
C)Total assets turnover ratio
D)Debt ratio
E)Net profit ratio

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, measures the ability of a company to pay its short-term liabilities using its most liquid assets. It is considered a measure of liquidity because it only takes into account the most liquid assets (cash, marketable securities, and accounts receivable) and excludes inventory, which can be less easily converted into cash.

Which of the Following Ratios Is Calculated to Help Determine