The liquidity ratios of the business are computed to know the short-term liquidity position of the business to know the capacity of paying the short-term liabilities. The same is computed and determined through the Current ratio and Acid-Test ratio. The solvency ratios suggest the long-term solvency position of the business taking into consideration the capital structure in which the finances have been employed. The same is determined through the debt-equity ratio and times interest earned. The profitability ratios suggest the earning capacity of the business in terms of profit margin based on sales revenue and return on total assets based on total assets of the business. : Report on the operating efficiency and liquidity of the business.

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Chapter 13, Problem 14QS

To determine

Introduction: The liquidity ratios of the business are computed to know the short-term liquidity position of the business to know the capacity of paying the short-term liabilities. The same is computed and determined through the Current ratio and Acid-Test ratio.

The solvency ratios suggest the long-term solvency position of the business taking into consideration the capital structure in which the finances have been employed. The same is determined through the debt-equity ratio and times interest earned.

The profitability ratios suggest the earning capacity of the business in terms of profit margin based on sales revenue and return on total assets based on total assets of the business.

:

Report on the operating efficiency and liquidity of the business.

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