Which of the following measures the ability to pay debts as they come due?
A) liquidity ratio
B) asset management ratio
C) leverage ratio
D) profitability ratio

Question

Quizplus · Accepted Answer

Liquidity measures the company's ability to pay off its short-term financial obligations. The liquidity ratio indicates the company's ability to meet its debt obligations as they come due. Therefore, the liquidity ratio is used to measure a company's short-term solvency.

Which of the Following Measures the Ability to Pay Debts