When financial managers are concerned about the ability to pay off debts that will come due in the next year, they are likely to focus on which of the following?
A) liquidity ratios
B) capital budgets
C) incremental analysis
D) leverage ratios

Question

Quizplus · Accepted Answer

When financial managers are concerned about the ability to pay off debts that will come due in the next year, they are likely to focus on liquidity ratios, which measure a company's ability to meet its short-term obligations with its current assets. Capital budgets relate to long-term funding decisions for investments in fixed assets, incremental analysis is a decision-making technique, and leverage ratios measure a company's use of debt financing.

When Financial Managers Are Concerned About the Ability to Pay