Identify which of the following are normally computed to identify the liquidity of the Business?

(A) Proprietary Ratio
(B) Interest Coverage Ratio
(C) Quick Ratio
(D) Debt Equity Ratio
(E) Current Ratio

Choose the correct answer from the options given below:

(C) and (E) only

The correct answer is option 1- (C) and (E) only.

(A) Proprietary Ratio - solvency ratio
(B) Interest Coverage Ratio - solvency ratio
(C) Quick Ratio- liquidity ratio
(D) Debt Equity Ratio- solvency ratio
(E) Current Ratio- liquidity ratio

Liquidity ratios gauge a company's ability to meet its short-term financial obligations promptly. Liquidity ratios are calculated to measure the short-term solvency of the business, i.e. the firm’s ability to meet its current obligations. These are analysed by looking at the amounts of current assets and current liabilities in the balance sheet. Two common liquidity ratios are the current ratio and the acid-test ratio or quick ratio.