Financial ratios that measure the ﬁrm's ability to pay its bills over the short run without undue stress are known as:
A) Asset management ratios.
B) Long-term solvency ratios.
C) Short-term solvency ratios.
D) Proﬁtability ratios.
E) Market value ratios.

Question

Quizplus · Accepted Answer

Short-term solvency ratios measure a company's ability to meet its short-term obligations, such as paying bills and debts, without causing financial stress. Examples of short-term solvency ratios include the current ratio and the quick ratio. Asset management ratios measure a company's efficiency in managing and utilizing its assets, long-term solvency ratios assess a company's ability to meet its long-term obligations, profitability ratios gauge how well a company is generating profits, and market value ratios evaluate a company's stock price performance.

Financial Ratios That Measure the ﬁRm's Ability to Pay Its