Question : A business firm's..................... is measured by its ability to meet its short-term obligations as they come due?
Option 1: Profitability
Option 2: Debt
Option 3: Liquidity
Option 4: None of the above
Correct Answer: Liquidity
Solution : The ability of a company to pay its short-term commitments when they become due is a measure of its liquidity. The term "liquidity" refers to how rapidly an asset or security can be purchased or sold on the market without having any impact on the asset's price. Hence 3 is the correct answer.
Question : Debt which the firm owes to outsiders are called
Question : Which party is interested to know the short-term solvency position of a firm, i.e., the ability to meet its short-term liabilities?
Question : With respect to the liquidity Ratio, which of the following statements is incorrect?
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