QUESTION IMAGE
Question
ratios that measure a companys ability to pay off short-term debt are ______.
- leverage ratios
- asset management ratios
- liquidity ratios
- market ratios
Brief Explanations
To determine the correct ratio type:
- Leverage ratios measure long - term debt - related risk.
- Asset management ratios assess how efficiently a company uses its assets.
- Liquidity ratios specifically evaluate a company's ability to meet short - term debt obligations (like current ratio, quick ratio).
- Market ratios relate to a company's market value (e.g., price - to - earnings ratio).
So the ratio measuring short - term debt - paying ability is liquidity ratios.
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C. liquidity ratios