Which type of ratio indicates a company's ability to generate income in the current period?
A)Profitability ratios
B)Liquidity ratios
C)Solvency ratios
D)Current ratios

Question

Quizplus · Accepted Answer

Profitability ratios relate to the company's performance in the current period,in particular,the company's ability to generate income.Liquidity ratios relate to the company's short-term survival,in particular,the company's ability to use current assets to repay liabilities as they become due.Solvency ratios relate to the company's long-run survival,in particular,the company's ability to repay lenders when debt matures and to make the required interest payments prior to the date of maturity.

Which Type of Ratio Indicates a Company's Ability to Generate