Choice "A" is correct. The acid test ratio evaluates short-term liquidity.
Choice "d" is incorrect. Return on total assets evaluates the profitability of a firm.
Choice "c" is incorrect. This is a distracter option. The sales to cash ratio does not evaluate liquidity.
Choice "b" is incorrect. Accounts receivable turnover is an activity ratio used to evaluate the efficiency of the firm. The number of days in the year, 365, divided by the accounts receivable turnover equals "days of sales outstanding."
