Which of the following is the long term liquidity ratio?

Interest coverage ratio

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Current ratio

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Stock turnover ratio

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Operating ratio

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Solution

The correct option is A Interest coverage ratio
Current ratio is a short term liquidity ratio.
Stock turnover ratio is an activity ratio
Operating ratio is a profitability ratio
Interest coverage ratio is a long term liquidity ratio which calculates the ability of the firm to meet the interest obligations.

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Similar questions

From the following details, calculate interest coverage ratio: Net Profit after tax Rs. 60,000; 15% Long-term debt 10,00,000; and Tax rate 40%.

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