The Financial Ratios That Measure a Firm's Ability to Pay

question 280

Multiple Choice

The financial ratios that measure a firm's ability to pay its short-term debts are called

• A) leverage ratios.
• B) liquidity ratios.
• C) equity ratios.
• D) profitability ratios.

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Definitions:

Estimated Useful Life

Estimated useful life is the period over which an asset is expected to be usable for its intended purpose, used to calculate depreciation.

Periodic Depreciation

The method of allocating the cost of a tangible asset over its useful life on a periodic basis, usually annually.

Retroactive Change

A change applied to past periods or transactions in financial records or systems, typically to correct errors or implement new information.

Revised Estimated

Revised estimated refers to the updated projection or calculation of a particular metric, budget, schedule, or plan based on new information or changes in circumstance.