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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.
Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.
- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false .
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
Directions : In the following questions, a statement of Assertion (A)...
Liquid ratio analyses liquid assets and liquid liabilities of a business unit in order to assess the extent of liquidity.
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Directions : In the following questions, a statement of Assertion (A)...
Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.
Reason (R): Liquid ratio is one of the various ratios used to measure the ability of a company to meet its long-term debts.
The correct answer is option 'C', which states that Assertion (A) is true, but Reason (R) is false.
Explanation:
Definition of Liquid Ratio:
- The liquid ratio, also known as the acid-test ratio, is a financial metric that measures the ability of a company to pay off its current liabilities with its quick assets.
- Quick assets include cash, cash equivalents, and marketable securities, which are easily convertible to cash within a short period of time.
Understanding Assertion (A):
- The assertion states that the liquid ratio reveals the strength of liquidity of a business unit.
- This means that the liquid ratio provides information about the company's ability to meet its short-term obligations.
- Liquidity refers to the company's ability to convert its assets into cash to meet its immediate financial needs.
Understanding Reason (R):
- The reason states that the liquid ratio is one of the various ratios used to measure the ability of a company to meet its long-term debts.
- This statement is incorrect as the liquid ratio primarily focuses on short-term liquidity, not long-term debt obligations.
- Long-term debt obligations are typically measured using ratios such as debt-to-equity ratio, debt ratio, or interest coverage ratio.
Conclusion:
- While Assertion (A) is true and the liquid ratio does reveal the strength of liquidity of a business unit, Reason (R) is false.
- The liquid ratio primarily measures short-term liquidity and does not directly measure the ability of a company to meet its long-term debts.
Reason (R): Liquid ratio is one of the various ratios used to measure the ability of a company to meet its long-term debts.
The correct answer is option 'C', which states that Assertion (A) is true, but Reason (R) is false.
Explanation:
Definition of Liquid Ratio:
- The liquid ratio, also known as the acid-test ratio, is a financial metric that measures the ability of a company to pay off its current liabilities with its quick assets.
- Quick assets include cash, cash equivalents, and marketable securities, which are easily convertible to cash within a short period of time.
Understanding Assertion (A):
- The assertion states that the liquid ratio reveals the strength of liquidity of a business unit.
- This means that the liquid ratio provides information about the company's ability to meet its short-term obligations.
- Liquidity refers to the company's ability to convert its assets into cash to meet its immediate financial needs.
Understanding Reason (R):
- The reason states that the liquid ratio is one of the various ratios used to measure the ability of a company to meet its long-term debts.
- This statement is incorrect as the liquid ratio primarily focuses on short-term liquidity, not long-term debt obligations.
- Long-term debt obligations are typically measured using ratios such as debt-to-equity ratio, debt ratio, or interest coverage ratio.
Conclusion:
- While Assertion (A) is true and the liquid ratio does reveal the strength of liquidity of a business unit, Reason (R) is false.
- The liquid ratio primarily measures short-term liquidity and does not directly measure the ability of a company to meet its long-term debts.
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer?.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer?.
Solutions for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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Here you can find the meaning of Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer?, a detailed solution for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.Reason (R): Liquid ratio is the one of the various ratios used to measure the ability of a company to meet its long-term debts.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice Commerce tests.
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