Yellow Dustur, a textile company, converts its overseas assets into cash in order to pay its debts to different companies the following year. In the given scenario, which of the following financial ratios is most likely being analyzed by Yellow Dustur?
A) Leverage ratios
B) Liquidity ratios
C) Asset management ratios
D) Profitability ratios

Question

Quizplus · Accepted Answer

Liquidity ratios are used to assess a company's ability to pay off its short-term liabilities with its short-term assets, which is relevant when converting assets to cash to pay debts.

Yellow Dustur, a Textile Company, Converts Its Overseas Assets into Cash