The short term solvency of a company is determined with ___ ratio
- debtors to equity
- current
-
acid test
- gross profit margin
The correct answer is: 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.