Which of the Following Statements About Liquidity and Solvency Ratios

question 136

Multiple Choice

Which of the following statements about liquidity and solvency ratios is correct?

• A)Unlike solvency ratios,liquidity ratios relate to the company's long-run survival.
• B)Both liquidity ratios and solvency ratios measure a company's ability to meet its financial obligations.
• C)Liquidity ratios include the return on equity ratio and the times interest earned ratio.
• D)Solvency ratios include the current ratio and the net profit margin ratio.

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Definitions:

Dispatching Rule

A guideline or procedure used to decide the order in which jobs, tasks, or items are processed or addressed.

Shortest Processing Time

A scheduling strategy that prioritizes tasks or operations based on the shortest amount of time required to complete them.

Defect Rate

The number of goods produced that are outside the company’s boundaries of acceptable quality.

Tolerance Range

The boundaries a manager sets in determining the acceptable quality of a product.