The two basic measures of liquidity are :

The correct answer is Option (2) → Current Ratio and Liquid Ratio

Liquidity ratios measure the short-term solvency of a business, that is, its ability to meet current obligations from current assets. The two ratios in this group are the current ratio and the liquid (quick) ratio.

Option (1) Inventory turnover ratio and Current Ratio — Incorrect. Inventory turnover is an activity ratio, not a liquidity ratio.

Option (3) Gross Profit Margin and Operating Ratio — Incorrect. Both are profitability ratios.

Option (4) Current Ratio and Average Collection Period — Incorrect. The average collection period comes from the trade receivables turnover, an activity ratio.