Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 2 - A Further Look at Financial Statements - Questions: 9

Answer

a) Liquidity ratios b) Profitability ratios c) Solvency ratios

Work Step by Step

a)The ratios measure the short term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. b) the ratios measure the operating results of the company for an accounting year(period). c) The ratios measure the ability of the company's long debts, when it matures and the periodical interest thereon. Solvency ratios measure the ability of the company to survive over a long period of time.
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