The correct answer is B. Acid test ratio.
The acid test ratio, also known as the quick ratio or liquidity ratio, is a measure of a company’s ability to meet its short-term obligations with its most liquid assets. It is calculated by dividing a company’s quick assets by its current liabilities. Quick assets are a company’s most liquid assets, which means they can be converted into cash quickly. Current liabilities are a company’s short-term debts that are due within one year.
A high acid test ratio indicates that a company has a good ability to meet its short-term obligations. A low acid test ratio indicates that a company may have difficulty meeting its short-term obligations.
Option A, turnover ratio, is a measure of how efficiently a company uses its assets to generate sales. It is calculated by dividing a company’s net sales by its average total assets.
Option C, solvency ratio, is a measure of a company’s ability to meet its long-term obligations. It is calculated by dividing a company’s long-term debt by its equity.
Option D, none of these, is incorrect.