Accounting for IGCSE & O level - Advanced Principles (Section 3 - No. 30)
Which financial ratio is most useful in evaluating the ability of a company to meet its short-term debts?
ROCE
Inventory Turnover
Quick Ratio
Gross Profit Margin
Explication
The Quick Ratio (also known as the Acid Test Ratio) and the Current Ratio are the key measures for evaluating ability to meet short-term obligations.