Which of the Following Ratios Is a Measure of a Company's

question 18

Multiple Choice

Which of the following ratios is a measure of a company's ability to pay all current liabilities if they become due immediately?

• A)The acid-test ratio
• B)The inventory turnover ratio
• C)The times-interest-earned ratio
• D)The debt ratio

---

Definitions:

Treasury Stock

Treasury stock refers to shares that were once part of the outstanding shares of a company but were repurchased by the company itself.

Treasury Stock

Shares of a company's own stock that it has reacquired from shareholders but not retired, thus reducing the amount of outstanding stock on the open market.

Cash Dividend

A cash distribution given to shareholders from a company's earnings.

Unlimited Liability

A legal structure in business where the owners are personally responsible for all of the company's debts, putting their personal assets at risk.