Which One of the Following Ratios Would Not Likely Be

question 212

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) Acid-test ratio
• C) Asset turnover
• D) Accounts receivable

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Definitions:

Breakeven Volume

The quantity of products sold or services rendered at which total revenues equal total costs, resulting in no net loss or gain.

Sales Revenues

The income earned by a company from its sales of goods or the provision of services before any costs or expenses are deducted.

Operating Income

Operating income, also known as operating profit or Earnings Before Interest and Taxes (EBIT), is a measure of the profit a company generates from its operations, before subtracting interest expenses and taxes.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent and salaries.