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Questions and Answers
What does the current ratio measure?
What does the current ratio measure?
- A company's long-term solvency
- A company's ability to pay its short-term liabilities with its short-term assets (correct)
- A company's profitability and efficiency
- A company's ability to generate sales from its assets
What is the quick ratio also known as?
What is the quick ratio also known as?
- Acid-test ratio (correct)
- Debt-to-equity ratio
- Inventory turnover ratio
- Return on assets ratio
How is the quick ratio different from the current ratio?
How is the quick ratio different from the current ratio?
- It excludes inventory from current assets (correct)
- It includes prepaid expenses in current assets
- It includes long-term investments in current assets
- It excludes accounts payable from current liabilities
Which ratio includes inventory in its calculation?
Which ratio includes inventory in its calculation?
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Which ratio provides a more stringent measure of a company's liquidity?
Which ratio provides a more stringent measure of a company's liquidity?
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Which ratio is unaffected by changes in inventory valuation methods?
Which ratio is unaffected by changes in inventory valuation methods?
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