Short-Term Solvency Ratios Are Used Primarily to Measure the Profitability

question 60

True/False

Short-term solvency ratios are used primarily to measure the profitability of a business firm, but they can also be used to measure long-term profitability.

---

Definitions:

Bilateral Contract

An agreement involving two parties where each promises to perform an act in exchange for the other's act.

Unilateral Contract

A legal agreement in which only one party makes a promise or undertakes a performance obligation in exchange for an act by the other party.

Breach of Contract

An act of breaking the terms set out in a contract, which can result in legal consequences for the party that fails to honor its commitments.

True Value

The genuine or actual worth of an item, service, or financial instrument as determined by underlying characteristics and market conditions.