Question

Which liquidity ratio measures the ability of the firm to meet its current liabilities and is an indicator of short-term solvency?

a.

Acid Test Ratio

b.

Cash Ratio

c.

Quick Ratio

d.

Current Ratio

Answer: (d).Current Ratio Explanation:The Current Ratio measures the ability of the firm to meet its current liabilities, and a higher current ratio indicates greater short-term solvency.

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Q. Which liquidity ratio measures the ability of the firm to meet its current liabilities and is an indicator of short-term solvency?

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