Financial ratios that measure the ability of a firm to meet its short-term commitments are known as ………… ratios.

Question

BlackTom AI · Accepted Answer

Restating the question: The prompt asks for the name of financial ratios that measure a firm's ability to meet its short-term commitments.

Option 1: Liquidity ratios. These are indeed the ratios that assess the firm’s short-term liquidity, typically focusing on current assets versus current liabilities, such as the current ratio or quick ratio. This aligns with the concept of meeting short-term obligations.

Option 2: Activity ratios. These evaluate how efficiently a firm uses its assets to generate sales or manage operations (e.g., inventory turnover, accounts receivable turnover). They do not specifically measure short-term liquidity.

Option 3: Solvency ratios. These examine a firm’s long-term financial obligations and overall long-run solvency, such as debt-to-equity or interest coverage. They are concerned with long-term stability rather than immediate short-term commitments.

Option 4: Profitability ratios. These assess a firm’s ability to generate profit from its resources (e.g., net profit margin, return on assets). They focus on earnings performance, not on meeting short-term liabilities.

Putting it together, only Liquidity ratios directly address the ability to meet short-term commitments, while the other options pertain to asset efficiency, long-term solvency, or profitability, respectively.

BFIL001 Week 8 Practice Quiz

Financial ratios that measure the ability of a firm to meet its short-term commitments are known as ………… ratios.

查看解析

登录即可查看完整答案

类似问题

Parsa's Organics currently has $56 in debt for every $100 in equity. If the company were to use some of its cash to purchase additional inventory, while maintaining its current equity and net income, which one of the following would decrease?

If a firm’s current ratio is increasing, it is likely that…

Financial ratios that measure the ability of a firm to meet its short-term commitments are known as ………… ratios.

Which of the following actions would NOT affect the quick / liquid ratio of a firm?

GreenTech has a current ratio of 2.5, higher than the industry average of 1.8. What does this likely indicate about GreenTech relative to the industry average:

Even though Firm A's current ratio exceeds that of Firm B, Firm B's quick ratio might exceed that of A. However, if A's quick ratio exceeds B's, then we can be certain that A's current ratio is also larger than B's.

A firm's long term assets = $100,000, total assets = $400,000, inventory = $50,000 and current liabilities = $200,000. Compute the current ratio and the quick ratio

The two basic measures of liquidity are ROE and ROA.

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单