Which Ratio Would Tell You If the Company Has Sufficient

question 84

Multiple Choice

Which ratio would tell you if the company has sufficient short-term assets to pay its short-term liabilities?

• A) leverage ratio
• B) profitability ratio
• C) debt-to-equity ratio
• D) current ratio

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Definitions:

Inventory Turnover Ratio

A financial metric that measures how many times a company has sold and replaced its inventory over a specific period.

Cost of Goods Sold

The immediate financial obligations related to manufacturing goods sold by a company, involving workforce and materials.

Average Inventory

A calculation used to estimate the value or quantity of inventory a business has over a certain period, often used to evaluate inventory turnover.

Average Inventory

The mean value of a company's inventory over a specific period, used to analyze inventory levels and manage stock efficiently.