Which One of the Following Ratios Would Not Likely Be

question 19

Multiple Choice

Which one of the following ratios would not likely be used by a short-term creditor in evaluating whether to sell on credit to a company?

• A) Current ratio
• B) Inventory turnover
• C) Asset turnover
• D) Accounts receivable turnover

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Definitions:

Market Value

The present rate at which a service or asset is available for purchase or sale.

Net Income

Net income is the total amount of profit a company earns after subtracting all of its expenses, taxes, and costs from its total revenue.

Unlimited Liability

A legal structure in business where owners are personally liable for all the debts and obligations of the business.

Limited Life

A term that refers to the finite operational lifespan of an entity, asset, or agreement, after which it ceases to exist or operate.