Trumbeak Inc., an electronics company, needs to pay its debt to Breston Bank the following year. Trumbeak Inc. sells half of its shares to other companies and is able to acquire the cash it needs to pay its debt. In this scenario, Trumbeak Inc.'s ability to sell its shares to other companies in order to pay its debt to Breston Bank is measured by calculating _____.
A) asset management ratios
B) profitability ratios
C) leverage ratios
D) liquidity ratios

Question

Quizplus · Accepted Answer

Liquidity ratios measure a company's ability to meet its short-term obligations, such as paying off debt, by converting assets into cash.