The measure of a company's ability to pays its debts quickly is called

Assessment: JAMB UTME - Principles of Accounts - 1995 Subject: Financial Accounting

Question 1 Report

The measure of a company's ability to pays its debts quickly is called
Answer Details
The measure of a company's ability to pay its debts quickly is called the "acid test ratio." This ratio measures the ability of a company to meet its short-term liabilities with its current assets that can be easily converted into cash, such as cash, marketable securities, and accounts receivable. A higher acid test ratio indicates a better ability to pay off short-term debts and is generally considered to be a good indicator of a company's financial health.
Read lesson note on Principles Of Double Entry (JAMB)
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