Question

_________ indicates the ability of the firm to meet its current or short-term obligations as and when they become due for payment.

a.

Liquidity ratio

b.

Profitability ratio

c.

Activity ratio

d.

Market test ratio

Answer: (a).Liquidity ratio Explanation:Liquidity ratio indicates the ability of the firm to meet its current or short-term obligations as and when they become due for payment. Liquidity ratios focus on the company's ability to cover its short-term liabilities with its short-term assets.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. _________ indicates the ability of the firm to meet its current or short-term obligations as and when they become due for payment.

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. Corporate financial management uses financial statement analysis for which of the following purposes?

Q. For which type of companies are Market Test Ratios mostly used?

Q. How is solvency analysis in non-life insurance companies described?

Q. What is the primary purpose of maintaining the required solvency margin in insurance companies?

Q. Which of the following is NOT a major solvency ratio?

Q. What provides the basis for the solvency of a business entity?

Q. What do activity ratios measure?

Q. What types of ratios do expense ratios comprise in non-life insurance companies?

Q. What is the primary focus of Operating Ratios/Expense Ratios?

Q. What does the Gross Profit Ratio express?

Q. Which of the following is NOT a profitability ratio?

Q. What is the purpose of liquidity ratios?

Q. Who are the stakeholders that have a special interest in ratio analysis based on financial statements?

Q. What is the primary focus of financial statement analysis?

Q. What accounting ratio is used to assess the effectiveness and efficiency of the employment of resources in non-life insurance companies?

Q. In the context of non-life insurance companies, what does the Incurred Claim Ratio measure?

Q. Which accounting ratios are generally used for the growth, ROI, and solvency analysis of general insurance companies?

Q. What accounting ratio is specifically for non-life insurance companies in the context of underwriting results and class-wise performance analysis?

Q. What does the Conservation Ratio for a life insurance company include in its calculation?

Q. What does the Investment Yield ratio for a life insurance company calculate?

Recommended Subjects

Are you eager to expand your knowledge beyond IC 89 Management Accounting? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!