Question

Which of the following groups of ratios shows the capability of an entity to meet its current financial obligations?

[0.88 marks]

• A. Debt-to-equity ratio, interest coverage ratio, and proprietary ratio
• B. Inventory turnover ratio and working capital turnover ratio
• C. Current ratio and quick ratio
• D. Gross profit ratio, net profit ratio, and return on investment

Answer 1

The correct option is C Current ratio and quick ratio

Liquidity ratios are used to assess a company's ability to meet its current financial obligations.
Current ratio and quick ratio are two components of liquid ratio.