A firm's ability to meet its short-term obligations is measured by __________________.

Question

Quizplus · Accepted Answer

Liquidity ratios are used to measure a firm's ability to meet its short-term obligations, such as paying off current debts and covering current expenses. Activity ratios measure a firm's efficiency in using its assets to generate revenue, while profitability ratios measure how much profit a firm is generating. Debt ratios measure a firm's debt levels in relation to its assets and equity.

A Firm's Ability to Meet Its Short-Term Obligations Is Measured