If management wishes to measure a business's ability to pay upcoming debts,they could refer to measures for:
A)leverage.
B)liquidity.
C)debt management.
D)profitability.

Question

Quizplus · Accepted Answer

Liquidity measures a company's ability to pay off its short-term obligations. It is the most relevant measure for management to assess a business's ability to pay upcoming debts. Leverage measures a company's use of debt financing, while debt management measures a company's ability to manage its overall debt load. Profitability measures a company's ability to generate profits.

If Management Wishes to Measure a Business's Ability to Pay