Which of the following class(es)of ratios examines the ability of the firm to meet its short-term obligations?
A)Profitability and activity ratios
B)Leverage and coverage ratios
C)Liquidity ratios
D)All of the above

Question

Quizplus · Accepted Answer

Liquidity ratios measure the ability of the firm to meet its short-term obligations. Profitability and activity ratios measure the firm's ability to generate profits from its operations, while leverage and coverage ratios assess the firm's ability to meet its long-term obligations. Therefore, the correct answer is C, which focuses solely on liquidity ratios.

Which of the Following Class(es)of Ratios Examines the Ability of the Firm