Which of These Categories of Financial Ratios Is Used to Measure

question 65

Multiple Choice

Which of these categories of financial ratios is used to measure the ability of a firm to meet its short-term financial obligations?

• A) liquidity ratios
• B) profitability ratios
• C) activity ratios
• D) leverage ratios

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Definitions:

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering problem-solving.

Availability Heuristic

A cognitive shortcut based on the first instances that pop into someone's mind upon assessing a particular subject, idea, technique, or choice.

Functional Fixedness

A psychological inclination that constrains someone to applying an artifact only in its accepted traditional role, thereby stifling creative thought and problem resolution.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person's mind when evaluating a specific topic, concept, method or decision.