The Primary Purpose of the Liquidity Ratios Is to Determine

question 156

Multiple Choice

The primary purpose of the liquidity ratios is to determine:

• A) the extent to which borrowed funds are used to finance assets
• B) the ability of the firm to meet short-term obligations to creditors
• C) the extent to which assets are used to support sales
• D) none of the above

---

Definitions:

Price Escalation

An increase in the price of products or services over time, often due to factors such as inflation or increased costs of materials.

Firm-Fixed-Price

A type of contract where the price agreed upon is not subject to any adjustments based on the cost experience of the supplier or service provider.

Substantial Chance

A significant opportunity or probability of occurrences that can have considerable effects or outcomes.

Purchasing Manager Indexes

Economic indicators derived from monthly surveys of private sector companies, providing insight into the economic health of the manufacturing sector.