A measure of short-term debt paying ability is a company's
A)return on shareholders' equity.
B)return on assets.
C)quick ratio.
D)profit margin ratio.
E)none of the above.

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, is a measure of a company's ability to meet its short-term obligations using its most liquid current assets. It excludes inventory and other current assets that may be difficult to convert into cash quickly. A higher quick ratio indicates that a company has a better ability to cover its short-term debts. The other options listed do not specifically measure short-term debt paying ability.

A Measure of Short-Term Debt Paying Ability Is a Company's