Which of the following statements provides an accurate description of financial ratios?
A) Liquidity ratios use information about current assets and current liabilities.
B) Asset management ratios focus on the relationship between profits and either average inventory or total assets.
C) Net margin and return on investment are useful leverage ratios.
D) Inventory turnover is one method for determining the company's financial liquidity.
E) Leverage ratios are helpful in assessing how well assets are employed in generating sales.

Question

Quizplus · Accepted Answer

Liquidity ratios indeed use information about current assets and current liabilities to assess a company's ability to meet its short-term obligations. This is a fundamental aspect of financial analysis, helping to determine the financial health of a company in terms of its liquid assets.

Which of the Following Statements Provides an Accurate Description of Financial