56 Views

Question : Assertion (A): Liquidity Ratios are used to evaluate a firm's long-term financial position.
Reason (R): Liquidity ratios, such as the current ratio and quick ratio, are useful in determining the firm's long-term financial position.

Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)

Option 3: Assertion (A) is true but Reason (R) is False

Option 4: Assertions (A) is False and Reason (R) is False.


Team Careers360 9th Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

Correct Answer: Assertions (A) is False and Reason (R) is False.


Solution : The firm's short-term financial position is evaluated using liquidity ratios.
Analysis of liquidity ratios aids in determining a company's ability to be solvent in the short term. This means that it aids in determining a company's capacity to fulfill its immediate responsibilities.
The quick and current ratios are liquidity ratios that help investors and analysts gauge a company's ability to meet its short-term obligations.
Therefore, liquidity refers to how rapidly a company's assets are transformed into cash.
Hence option 4 is the correct answer.

Related Questions

Chandigarh University Admissi...
Apply
Ranked #1 Among all Private Indian Universities in QS Asia Rankings 2025 | Scholarships worth 210 CR
TAPMI MBA 2025 | Technology M...
Apply
MBA Admission Open in Technology Management and AI & Data Science | NAAC A++ | Institution of Eminence | Assured Scholarships
Sanskriti University LLM Admi...
Apply
Best innovation and research-driven university of Uttar Pradesh
Maya Devi University LLM admi...
Apply
43.6 LPA Highest Package | 5.48 LPA Average Package | 150+ Courses in UG, PG, Ph.D
Amity University, Noida Law A...
Apply
700+ Campus placements at top national and global law firms, corporates, and judiciaries
Great Lakes PGPM & PGDM 2025
Apply
Admissions Open | Globally Recognized by AACSB (US) & AMBA (UK) | 17.3 LPA Avg. CTC for PGPM 2024 | Extended Application Deadline: 10th Feb 2024
View All Application Forms

Download the Careers360 App on your Android phone

Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile

150M+ Students
30,000+ Colleges
500+ Exams
1500+ E-books