Questions: Multiple Choice Question Liquidity ratios measure a company's ability to meet short-term financial obligations.

Multiple Choice Question Liquidity ratios measure a company's ability to meet short-term financial obligations.
Transcript text: Multiple Choice Question Liquidity ratios measure a company's ability to meet short-term financial obligations.
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Solution

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Answer

The answer is short-term.

Explanation
Option 1: short-term

Liquidity ratios are financial metrics used to determine a company's ability to pay off its short-term liabilities with its short-term assets. These ratios are crucial for assessing the financial health of a company in the near term. Common liquidity ratios include the current ratio and the quick ratio.

Option 2: owners' equity

Owners' equity refers to the residual interest in the assets of the entity after deducting liabilities. It is not directly related to liquidity ratios, which focus on short-term financial obligations.

Option 3: stockholders'

Stockholders' equity is similar to owners' equity and represents the equity stake currently held on the books by a firm's equity investors. It is not a measure of a company's ability to meet short-term financial obligations.

Option 4: long-term

Long-term financial obligations refer to debts and liabilities that are due in more than one year. Liquidity ratios do not measure a company's ability to meet long-term obligations; instead, they focus on short-term liabilities.

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