Question
Akash Ltd wants to know its ability to meet its
short-term obligations towards the various stakeholders. Which category of the following ratios can help it in analysing this?Solution
Liquidity ratios helps in analyzing the ability of the company to meet its short-term obligations towards the various stakeholders whereas Solvency Ratios helps in analyzing the ability of the company to meet its long-term contractual obligations towards the various stakeholders. It depicts how well the company is capitalized and if there can be any danger to its long term existence. Profitability Ratios helps in analysing different profitability margins.Â
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