Your firm is a supplier to a major chain of discount stores.You have heard rumors that this chain of discount stores is in financial difficulty.Which financial ratios would indicate the discount store's ability or inability to pay its short-term debts?

Question

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Liquidity ratios measure a company's ability to meet its short-term obligations. Examples of liquidity ratios include the current ratio and quick ratio. These ratios would provide insight into the discount store's ability to pay its short-term debts.

Your Firm Is a Supplier to a Major Chain of Discount