BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Acid-test Ratio
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Cash Ratio
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Debt Ratio
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Current Ratio
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Detailed explanation-1: -A liquidity ratio is a type of financial ratio used to determine a company’s ability to pay its short-term debt obligations.
Detailed explanation-2: -The current ratio measures a company’s ability to pay off its current liabilities (payable within one year) with its current assets such as cash, accounts receivable, and inventories. The higher the ratio, the better the company’s liquidity position.
Detailed explanation-3: -Quick Ratio-A firm’s cash or near cash current assets divided by its total current liabilities. It shows the ability of a firm to quickly meet its current liabilities.
Detailed explanation-4: -What Are Liquidity Ratios? Liquidity ratios are an important class of financial metrics used to determine a debtor’s ability to pay off current debt obligations without raising external capital.
Detailed explanation-5: -Quick Ratio Explained The quick ratio represents the extent to which a business can pay its short-term obligations with its most liquid assets. In other words, it measures the proportion of a business’s current liabilities that it can meet with cash and assets that can be readily converted to cash.