Which of These Categories of Financial Ratios Is Used to Measure

question 75

Multiple Choice

Which of these categories of financial ratios is used to measure a company's ability to meet its short-term financial obligations?

• A) Leverage ratios
• B) Profitability ratios
• C) Activity ratios
• D) Liquidity ratios

---

Definitions:

Supplies

Items used in the operation of a business but not directly tied to the production of goods or services, such as office supplies.

Balance Sheet

A financial statement that displays a company's financial position, showing assets, liabilities, and equity as of a specific date.

Accounting Equation

The accounting equation is the foundational principle of double-entry bookkeeping, expressed as Assets = Liabilities + Owner's Equity, balancing a company's financial statements.

Statement Of Cash Flows

A financial document showing how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.