The ratios that are used to determine a company's short-term debt paying ability are

a. asset turnover, times interest earned, current ratio, and accounts receivable turnover.

b. times interest earned, acid-test ratio, current ratio, and inventory turnover.

c. times interest earned, inventory turnover, current ratio, and accounts receivable turnover.

d. current ratio, acid-test ratio, accounts receivable turnover, and inventory turnover.

Question

Business

Aisha Rivers

9 September, 06:34

The ratios that are used to determine a company's short-term debt paying ability are

a. asset turnover, times interest earned, current ratio, and accounts receivable turnover.

b. times interest earned, acid-test ratio, current ratio, and inventory turnover.

c. times interest earned, inventory turnover, current ratio, and accounts receivable turnover.

d. current ratio, acid-test ratio, accounts receivable turnover, and inventory turnover.

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Answers (1)

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Carlos Dougherty · Answer 1

d. current ratio, acid-test ratio, accounts receivable turnover, and inventory turnover.

Explanation:

For determining the company short term debt paying ability, the liquidity ratios are used i. e current ratio, acid test ratio, account receivable turnover and inventory ratio

By using this ratios the company could able to analyze their liquidity that means they have the sufficient balance to pay off the short term debt or liability i. e current liabilities moreover the time period is maximum 1 year for paying off the short term liabilities