Financial Ratio Quiz

Liquidity ratio (correct)

Leverage ratio

Activity ratio

Profitability ratio

Lower efficiency and value creation for shareholders

Lower risk of financial distress

Higher efficiency and value creation for shareholders

Higher risk of default or bankruptcy (correct)

How well a company can generate income relative to its revenue, costs, assets, or equity

How efficiently a company is using its assets to generate revenues and cash

The liquidity of the firm's inventory

The firm's ability to meet its current obligations with the most liquid of its current assets (correct)