Match the classifications of ratios with each description.
-Measures the ability of the company to meet its current obligations
A)Liquidity Ratio
B)Leverage Ratio
C)Profitability Ratio
D)Horizontal Analysis
E)Trend Analysis

Question

Quizplus · Accepted Answer

Liquidity ratios are used to measure the company's ability to meet its short-term obligations. These ratios deal with the company's current assets and current liabilities.

Other options and their explanations:
B) Leverage ratios measure the degree of a company's debt financing and its potential to meet long-term commitments.
C) Profitability ratios measure how much profit a company generates compared to its revenue or assets.
D) Horizontal analysis is a financial analysis method that compares financial statement data from multiple periods.
E) Trend analysis is a technique that examines a company's financial data over multiple periods to identify patterns and trends.

Match the Classifications of Ratios with Each Description