What are the different types of liquidity ratiosA. Interest coverage ratioB. Current ratioC. Inventory turnover ratioD. Gross profit ratioE. Acid test ratio Choose the correct answer from the options given below:
- AA & B only
- BB & E only
- CB & D only
- DD & E only
Solution & Step-by-step Explanation
Liquidity ratios measure the short-term solvency of a business. The common liquidity ratios are the Current Ratio (B) and the Acid Test / Quick Ratio (E).