Asked by
Ibrahim Abdulhai
on Dec 09, 2024Verified
A very short-term creditor would likely be most interested in a firm's ________________.
A) Current ratio
B) Quick ratio
C) NWC to total assets ratio
D) Cash ratio
E) Interval measure
Quick Ratio
A measure of a company's ability to meet its short-term obligations using its most liquid assets, calculated as (cash + marketable securities + accounts receivable) / current liabilities.
Current Ratio
This ratio assesses a firm's capacity to cover its obligations due in the next year by comparing its current assets to its current liabilities.
Interval Measure
A financial metric used to determine how long a company can operate with its available amount of current assets, calculated usually in months.
- Evaluate a firm's ability to meet short-term obligations and operate without additional cash inflows.
Verified Answer
AA
Learning Objectives
- Evaluate a firm's ability to meet short-term obligations and operate without additional cash inflows.