Question

What is the purpose of liquidity ratios?

a.

Assessing profitability

b.

Meeting current or short-term obligations

c.

Analyzing growth potential

d.

Comparing with industry standards

Answer: (b).Meeting current or short-term obligations Explanation:The purpose of liquidity ratios is to indicate the ability of the firm to meet its current or short-term obligations.

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Q. What is the purpose of liquidity ratios?

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