The ratios that refer to the ability of the firm to meet the short term obligations out of its short...........

Quantitative Aptitude (Pb Patwari) Accountancy

Download Solution PDF

The ratios that refer to the ability of the firm to meet the short term obligations out of its short term resources

Liquidity ratio

Leverage ratio

Activity ratio

Profitability ratio

Explanation:

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. Liquidity ratios measure a company's ability to pay debt obligations and its margin of safety through the calculation of metrics including the current ratio, quick ratio, and operating cash flow ratio.