Which ratio is widely used to measure the short-term solvency of a firm
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Answer:
Liquidity Ratio
Explanation:
It compares current assets to current liabilities which decides the short tern solvency of the firm.
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Ratio that measures the short-term solvency of a firm
Explanation:
Solvency is the ability of a firm to repay it's obligations. Liquidity ratio is used to measure the short term solvency of a firm.
Liquidity ratio gives us information about the company's ability to convert it's assets into cash and hence meet it's short term obligations. it includes various ratios such as current ratio, acid test ratio, cash ratio, working capital ratio etc. each of the above ratio gives information about various aspects of the short term solvency of the firm.
Learn more:
Ratio that measures long term solvency of a firm
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