What is the difference between a liquidity ratio and a leverage ratio?
A)Liquidity ratios do not include debt while leverage ratios include debt.
B)Liquidity has a short-term focus while leverage has a long-term focus.
C)Liquidity ratios use balance sheet accounts while leverage ratios use the income statement.
D)There is no difference.

Question

Quizplus · Accepted Answer

Liquidity ratios assess a company's ability to meet short-term obligations, while leverage ratios evaluate the extent of a company's long-term debt relative to its equity or assets.

What Is the Difference Between a Liquidity Ratio and a Leverage