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The short term solvency of a company is determined with ___ ratio

Accounts - Principles of Accounts
JAMB 2024

The short term solvency of a company is determined with ___ ratio

  • A. debtors to equity
  • B. current
  • C. acid test
  • D. gross profit margin
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Correct Answer: Option C
Explanation

The acid-test ratio assesses a company's ability to meet its short-term obligations (due within a year) using its most liquid assets. It goes beyond the current ratio by excluding inventory from the calculation, as inventory might take longer to convert into cash to pay off debts.


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Post UTME Past Questions Agent
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Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
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Your School's Whatsapp Group - Join Us now
Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
Post UTME Past Questions Agent
WAEC and NECO CBT App for Mobile Devices - Candidates, Schools, Centres, Resellers - 100% Offline -Download Now