Ratios that measure the short-term ability of the company to pay its maturing obligations are
A) liquidity ratios.
B) profitability ratios.
C) solvency ratios.
D) trend ratios.

Question

Quizplus · Accepted Answer

Liquidity ratios measure a company's ability to meet its short-term obligations. Examples of liquidity ratios include the current ratio and the quick ratio. Profitability ratios measure a company's ability to generate profits, while solvency ratios measure a company's ability to meet its long-term obligations. Trend ratios analyze a company's performance over time.

Ratios That Measure the Short-Term Ability of the Company to Pay