Match the significance of ratios List-I List-II a) Liquidity Ratio i) How efficiently company utilizes…
Liquidity ratios assess the ability to meet short-term obligations, and profitability ratios assess profit generation. Turnover ratios measure asset-use efficiency in…
Choose your answer
Match the significance of ratios
| List-I | List-II |
| a) Liquidity Ratio | i) How efficiently company utilizes its assets to generate sales |
| b) Profitability Ratio | ii) Assess the level of financial risk by analysing the use of debt in the capital structure |
| c) Turnover Ratio | iii) How effectively a company generates profit from its operations |
| d) Leverage Ratio | iv) Ability to meet short term obligations |
Answer and explanation
Correct answer D
Liquidity ratios assess the ability to meet short-term obligations, and profitability ratios assess profit generation. Turnover ratios measure asset-use efficiency in generating sales, while leverage ratios assess the debt-related financial risk of the capital structure.
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Karnataka SET (KSET)