What type of ratios measure the firm's ability to meet cash needs as they arise?
A) Activity ratios.
B) Liquidity ratios.
C) Leverage ratios.
D) Profitability ratios.

Question

Quizplus · Accepted Answer

Liquidity ratios measure the ability of a firm to meet its short-term cash requirements. These ratios include the current ratio, quick ratio, and cash ratio. Activity ratios measure the efficiency of a company's operations, leverage ratios measure the extent to which a company is using debt to finance its operations, and profitability ratios measure a company's ability to generate profits from its operations.

What Type of Ratios Measure the Firm's Ability to Meet