Question

Which ratio measures the corporation's ability to meet its financial obligations?

a. leverage ratios.

b. liquidity ratios.

c. activity ratios.

d. asset management ratios.

Which ratio measures the effectiveness of the corporation's use of resources?

a. leverage ratios.

b. liquidity ratios.

c. activity ratios.

d. asset management ratios.

Please provide the correct answer if knowledgable in this area and do not copy and paste the answers from previous responses. Do not attempt this question if you are not familiar with it.

Answer 1

1.Option a, leverage ratios indicate the amount of debt taken by a firm. It shows how a company’s assets and business operations are financed. It measures the ability of a company to fulfill its financial obligations.

Option b, liquidity ratios measures the ability of a company to pay its short-term obligations.

Option c, activity ratios measures how effectively a firm is able to generate revenue in the form of cash and sales on its assets, liability and share accounts.

Option d, asset management ratios measures how effectively a firm is using its assets to produce sales.

Hence, the answer is option a.

2.Option a, leverage ratios indicate the amount of debt taken by a firm. It shows how a company’s assets and business operations are financed. It measures the ability of a company to fulfill its financial obligations.

Option b, liquidity ratios measure the ability of a company to pay its short-term obligations.

Option c, activity ratios measures how effectively a firm is able to generate revenue in the form of cash and sales on its assets, liability and share accounts.

Option d, asset management ratios measures how effectively a firm is using its assets to produce sales.

Hence, the answer is option d.

In case of any query, kindly comment on the solution.