Which type of ratios focus on the ability of a firm to meet its short-term financial obligations?
A) Activity ratios
B) Liquidity ratios
C) Leverage ratios
D) Profitability ratios

Question

Quizplus · Accepted Answer

Liquidity ratios focus on the ability of a firm to meet its short-term financial obligations, such as current ratio and quick ratio. Activity ratios measure how efficiently a company uses its assets, leverage ratios measure the amount of debt used by a company, and profitability ratios focus on a company's ability to generate profits.

Which Type of Ratios Focus on the Ability of a Firm