Solvency ratios are used to measure a company's short-term ability to pay its maturing obligations and to meet unexpected needs for cash

Question

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Solvency ratios measure a company's ability to meet its long-term obligations and financial commitments, not its short-term ability. Liquidity ratios, on the other hand, assess a company's short-term ability to pay its maturing obligations.

Solvency Ratios Are Used to Measure a Company's Short-Term Ability