n NISM Certifications
XXI NISM Series XXI-A
Medium

The 'Liquidity Ratio' in financial statements indicates:

Practice question from NISM XXI A for PMS - Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Ability to meet short-term obligations

    Correct answer

  2. B

    Profitability of the company

  3. C

    Debt repayment capacity

  4. D

    Asset turnover efficiency

Why this is the answer

Liquidity ratios, such as the current ratio, measure whether a company has enough liquid assets to cover short-term liabilities.

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