Which of the following ratios are particularly interesting to short term creditors?
Correct answer: A. Liquidity Ratios
- A. Liquidity Ratios
- B. Long-term Solvency Ratios
- C. Profitability Ratios
- D. Market Value Ratios
Explanation
Short-term creditors focus on whether current assets can cover near-term liabilities, which is measured by liquidity ratios. Solvency ratios concern long-term debt-paying ability, while profitability and market value serve different users.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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