Which of the following measures a company's ability to pay debts as they come due?
A) liquidity ratios
B) asset management ratios
C) leverage ratios
D) profitability ratios

Question

Quizplus · Accepted Answer

Liquidity ratios measure a company's ability to meet its short-term obligations by comparing its current assets to its current liabilities. This is important in determining a company's ability to pay off debts as they come due. Asset management ratios measure how effectively a company uses its assets to generate revenue. Leverage ratios measure a company's level of debt relative to its equity. Profitability ratios measure a company's ability to generate profit relative to its revenue.

Which of the Following Measures a Company's Ability to Pay