The ratios that measure a company's ability to pay off short-term debt are known as:
A) Liquidity Ratios.
B) Debt Management Ratios.
C) Profitability Ratios.
D) None of the above

Question

Quizplus · Accepted Answer

Liquidity ratios measure a company's ability to meet its short-term obligations and debts by comparing its most liquid assets (such as cash, marketable securities, and current receivables) to its short-term liabilities. This makes them crucial for assessing a company's short-term financial health.

The Ratios That Measure a Company's Ability to Pay Off