Minnie Knows That Double Entry Has a Lot of Short-Term

question 302

Multiple Choice

Minnie knows that Double Entry has a lot of short-term debt coming due in the next year, and wants to make sure that the company will have the ability to make the required payments. Given a troubling downturn in construction activity over the past couple of months, she is not confident that Double Entry can count on selling its current inventory of doors before the debt comes due. Which of the following ratios would be most relevant to Minnie?

• A) current ratio
• B) debt to equity ratio
• C) return on sales
• D) acid-test ratio