Long-term creditors are usually most interested in evaluating:
A)Solvency
B)Managerial effectiveness
C)Liquidity
D)Profitability.

Question

Quizplus · Accepted Answer

Solvency ratios are used to analyze a company's long-term debt-paying ability and its financing structure. Managerial effectiveness is measured using profitability ratios. Liquidity ratios such as the current ratio or the quick ratio indicate a firm's short-term ability to pay its bills. Short-term creditors would be most interested in the firm's liquidity. Profitability ratios assess a company's success in generating profits and how these profits are used to reward investors.

Long-Term Creditors Are Usually Most Interested in Evaluating