What are ratios of special interest to the firm's creditors and measure the firm's ability to pay short-term debts as they come due?
A) liquidity ratios
B) earnings ratios
C) profitability ratios
D) current ratios

Question

Quizplus · Accepted Answer

Liquidity ratios are ratios of special interest to the firm's creditors as they focus on the firm's ability to pay short-term debts as they come due. Examples of liquidity ratios include the current ratio, quick ratio, and cash ratio. Earnings ratios, profitability ratios, and current ratios are not specifically focused on a firm's ability to pay short-term debts.

What Are Ratios of Special Interest to the Firm's Creditors