Question : The short-term solvency is which of the following?
Option 1: Debtors turnover ratio
Option 2: Liquid ratio
Option 3: Stock turnover ratio
Option 4: Price earning ratio
Answer (1)
22nd Jan, 2024
Correct Answer: Liquid ratio
Solution :
Ratios including the current ratio, acid test ratio, inventory turnover ratio, and accounts receivable turnover ratio are used to determine if a company has enough liquid assets to cover short-term obligations when they become due.
Hence option 2 is the correct answer.
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