1 View

Question : The following groups of ratios primarily measure risk:

Option 1: Liquidity, activity and profitability

Option 2: Liquidity, activity and debt

Option 3: Liquidity, debt and profitability

Option 4: Liquidity, activity and common stock


Team Careers360 6th Jan, 2024
Answer (1)
Team Careers360 7th Jan, 2024

Correct Answer: Liquidity, debt and profitability


Solution : Liquidity Ratio : You can discover if you have the capacity to meet your forthcoming obligations by looking at your liquidity ratio. This typically indicates you have enough cash on hand, in your bank account, or in assets that can be rapidly converted into cash to cover your expenses. If you don't, your company can experience problems and perhaps have to stop operating.

Debt ratios indicate how much a company borrows to finance its activities. They may also be applied to examine a party's capacity to repay a loan. Investors that have stock ownership in a company may be at danger if the debt level is too high, thus these ratios are crucial.

Profitibility Ratio : An annual or quarterly analysis of your company's profitability ratios gives you insight into how it is doing. These ratios can be compared throughout time to provide insight into current tactics as well as provide an explanation for years with subpar financial performance.

Hence the correct answer is option 3.

Related Questions

CLAT Current Affairs with GK ...
Apply
Stay updated with current affairs & check your preparation with the CLAT General Knowledge Mock Tests Ebook
CLAT English Language Mock Tests
Apply
Free Ebook - CLAT 2025 English Language questions with detailed solutions
ICFAI Business School-IBSAT 2024
Apply
9 IBS Campuses | Scholarships Worth Rs 10 CR
CLAT Legal Reasoning Mock Tests
Apply
Free Ebook - CLAT 2025 legal reasoning questions with detailed solutions
GIBS Business School Bangalor...
Apply
100% Placements with 220+ Companies
Great Lakes PGPM & PGDM 2025
Apply
Admissions Open | Globally Recognized by AACSB (US) & AMBA (UK) | 17.3 LPA Avg. CTC for PGPM 2024
View All Application Forms

Download the Careers360 App on your Android phone

Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile

150M+ Students
30,000+ Colleges
500+ Exams
1500+ E-books