Which of the following groups of ratios measure a company's ability to pay its current liabilities?
A)Current ratio, acid-test ratio and the times-interest-earned ratio
B)Current ratio and acid-test ratio
C)Current ratio and times-interest-earned
D)Current ration and debt ratio

Question

Quizplus · Accepted Answer

The current ratio and acid-test ratio both measure a company's ability to pay its current liabilities. The current ratio measures a company's ability to pay current liabilities with current assets, while the acid-test ratio measures a company's ability to pay current liabilities with its most liquid assets. The times-interest-earned ratio measures a company's ability to pay interest on its long-term debt, while the debt ratio measures the proportion of a company's assets that are financed by debt.

Which of the Following Groups of Ratios Measure a Company's