The Following Groups of Ratios Primarily Measure Risk

question 64

Multiple Choice

The following groups of ratios primarily measure risk.

• A) liquidity, activity, and profitability
• B) liquidity, activity, and common stock
• C) liquidity, activity, and debt
• D) activity, debt, and profitability

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Definitions:

Compromise Policy

A strategy of finding a middle ground between two conflicting positions to resolve a dispute or achieve a mutually acceptable outcome.

Financial Stability

A state in which the financial system, encompassing institutions, markets, and the overall economy, is capable of withstanding shocks without significant disruption.

Low-Dividend Policy

A financial strategy where a company decides to distribute a relatively small portion of its earnings to shareholders in the form of dividends.

Retention Ratio

The proportion of net income that is retained in the business rather than paid out to shareholders as dividends.