Which Type of Ratios Focus on the Ability of a Firm

question 60

Multiple Choice

Which type of ratios focus on the ability of a firm to meet its short-term financial obligations?

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

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Definitions:

Recessions

Phases of brief economic downturns marked by diminished trade and industrial operations, typically characterized by a decrease in Gross Domestic Product (GDP) for two consecutive quarters.

Stock Market Crashed

A sudden and significant decline in the stock market's value, leading to widespread financial loss and often triggering economic uncertainty.

Economic Decline

A period marked by a decrease in GDP, employment, and trade, often leading to lower levels of production and consumer spending.

Returning Veterans

Individuals who have served in the military and are returning to civilian life.