Net cash flows from operating activities divided by current liabilities,is the formula for:
A)the quick asset ratio
B)the cash flow ratio (liquidity)
C)the turnover of liabilities ratio
D)the debt coverage ratio

Question

Quizplus · Accepted Answer

The formula given is for the cash flow ratio, which measures a company's ability to pay off its current liabilities with its net cash flow from operating activities. The quick asset ratio (A) is calculated by dividing quick assets by current liabilities, the turnover of liabilities ratio (C) is calculated by dividing cost of goods sold by average current liabilities, and the debt coverage ratio (D) measures a company's ability to meet its debt obligations by comparing its net operating income to its interest and principal payments. None of these are represented by the given formula.

Net Cash Flows from Operating Activities Divided by Current Liabilities,is