Which of the Following Is a Difference Between Liquidity Ratios

question 85

Multiple Choice

Which of the following is a difference between liquidity ratios and leverage ratios?

• A) Liquidity ratios measure how effectively a firm uses its assets to generate revenue, whereas leverage ratios compare the amount of profit to some measure of resources invested.
• B) Liquidity ratios compare the amount of profit to some measure of resources invested, whereas leverage ratios measure how effectively a firm uses its assets to generate revenue.
• C) Liquidity ratios measure a firm's ability to pay its short-term liabilities as they come due, whereas leverage ratios measure the extent to which a firm relies on debt to meet its financing needs.
• D) Liquidity ratios measure the net income per share of common stock outstanding, whereas leverage ratios indicate the earnings per dollar by the owners of a company.

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Definitions:

Examined

The act of inspecting, studying, or investigating someone or something closely and in detail.

Dystrophin

A protein involved in maintaining the strength and integrity of muscle fibers.

Protein

Essential molecules for the structure, function, and regulation of the body's tissues and organs.

Contracture

The permanent tightening of muscles, tendons, skin, and other tissues, leading to a decrease in flexibility and mobility.