Which of the following ratios is most useful in evaluating liquidity?
A)Acid-test ratio.
B)Return on equity.
C)Profit marginy ratio.
D)Asset turnover.

Question

Quizplus · Accepted Answer

The acid-test ratio is the most useful ratio in evaluating liquidity because it focuses solely on the company's ability to pay its short-term debts with its most liquid assets (cash, marketable securities, and accounts receivable). This ratio provides a more accurate view of a company's ability to meet its short-term obligations and is therefore a better indicator of liquidity than the other ratios listed.

Which of the Following Ratios Is Most Useful in Evaluating