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    Question

    Which ratios will be used to find out the ability of the

    firm to pay its dues to stakeholders?
    A Liquidity Ratios Correct Answer Incorrect Answer
    B Solvency Ratios Correct Answer Incorrect Answer
    C Profitability Ratios Correct Answer Incorrect Answer
    D Activity Ratio Correct Answer Incorrect Answer
    E All of the above Correct Answer Incorrect Answer

    Solution

    Liquidity Ratios: To meet its commitments, business needs liquid funds. The ability of the business to pay the amount due to stakeholders as and when it is due is known as liquidity, and the ratios calculated to measure it are known as ‘Liquidity Ratios’. These are essentially short-term in nature.

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