Which of the Following Measures a Company's Ability to Pay

question 155

Multiple Choice

Which of the following measures a company's ability to pay current liabilities with current assets?

• A) Net income
• B) Debt ratio
• C) Current ratio
• D) Total assets

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Definitions:

Liquid Resource

Assets that can be quickly and easily converted into cash without significant loss in value.

Inventory

the raw materials, work-in-process products, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

Solvency Ratios

Solvency Ratios measure a company's ability to meet its long-term debts and financial obligations, indicating its financial health.

Maturing Obligations

Short-term debts or obligations that are nearing their due date and need to be repaid or refinanced.