Liquidity ratios measure short-term (not long-term) solvency. Stock is excluded from liquid assets because it is not readily convertible into cash. Gross profit ratio measures trading efficiency, not overall profitability; net profit ratio does that. Solvency ratios indeed measure long-term solvency of a firm, so option (b) is correct.
Which one of the following statements is true?
CUET UG 2022 — Accountancy Financial Statements
2022mcqmedium
Which one of the following statements is true?
Official previous-year question
Held on 8 Aug 2022 · Verified 13 Jul 2026.
Options
- A
Liquidity ratios measure long term solvency of a concern.
- B
Solvency ratio is a part of long term solvency
- C
Stock is part of liquid assets.
- D
Gross profit ratio measures overall profitability of a concern.
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