Which of the following statements is true?
A)Liquidity ratios measure a company's long-term ability to pay debt.
B)Solvency ratios measure a company's ability to repay current debt.
C)A high liquidity ratio generally indicates that a company has a greater ability to meet its current obligations.
D)Solvency ratios measure a company's ability to survive on a short-term basis.

Question

Quizplus · Accepted Answer

Liquidity ratios, such as the current ratio and quick ratio, are used to assess a company's ability to meet its short-term obligations with its short-term assets. A high liquidity ratio indicates that the company is in a good position to pay off its current liabilities as they come due.

Which of the Following Statements Is True