Which of the following ratios would be the most useful in evaluating the ability of a firm to meet its short-term obligations?
A) The quick ratio (acid test)
B) Return on equity
C) Total asset turnover
D) Operating profit margin

Question

Quizplus · Accepted Answer

The quick ratio (acid test) is a liquidity ratio that evaluates a firm's ability to meet its short-term obligations using only the most liquid assets. This ratio is more useful for short-term evaluation than return on equity, total asset turnover, or operating profit margin.

Which of the Following Ratios Would Be the Most Useful