In the near term, the important ratios that provide the information critical to the short-runoperation of the firm are
A) liquidity, activity, and debt.
B) activity, debt, and profitability.
C) liquidity, activity, and common stock.
D) liquidity, activity, and profitability.

Question

Quizplus · Accepted Answer

Liquidity ratios measure a firm's ability to meet its short-term obligations. Activity ratios measure the efficiency of a firm's operations. Profitability ratios measure the company's ability to earn a profit. These three ratios provide vital information for the day-to-day operation of the firm because they help assess whether the company has the resources necessary to meet its obligations, to efficiently use its resources, and to generate profit from its operations. Hence, liquidity, activity, and profitability ratios are the critical ratios for the short-run operation of the firm.

In the near Term, the Important Ratios That Provide the Information