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:

Offspring

The children or young born to a person, animal, or plant.

Maturation

Biological growth processes that enable orderly changes in behavior, relatively uninfluenced by experience.

Education

The process of facilitating learning or the acquisition of knowledge, skills, values, beliefs, and habits through various means.

Accommodation

In cognitive psychology, the process of modifying existing cognitive schemas, perceptions, and understandings to incorporate new information.