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

question 153

Multiple Choice

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

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

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Definitions:

Required Reserves

The minimum amount of funds that a bank must hold in reserve against deposits, as mandated by regulatory bodies.

U.S. Government Securities

Financial instruments issued by the United States Department of the Treasury to finance federal government spending.

Clear

in an economic or financial context often means to settle a transaction or complete a trade or payment process.

Federal Reserve's Assets

These are financial assets held by the Federal Reserve Bank, including government securities, mortgage-backed securities, and loans to banks.