Kwane wants to assess his firm's ability to meet its short-term obligations.Which of the following ratios are the most relevant?

Question

Quizplus · Accepted Answer

Liquidity ratios are the most relevant in assessing a firm's ability to meet its short-term obligations. These ratios measure the firm's ability to generate cash or convert assets into cash to meet its short-term debts. Examples of liquidity ratios include current ratio and quick ratio. Activity ratios measure how efficiently a firm manages its assets, debt ratios measure the firm's use of debt financing, and profitability ratios measure the firm's ability to generate profits.

Kwane Wants to Assess His Firm's Ability to Meet Its