Which of the following is included in liquidity ratios of a company?

A) Current ratio
B) Earning per share
C) Quick ratio
D) Proprietary ratio
E) Liquid ratio

Choose the correct answer from the options given below.

ACE

The correct answer is option 1- ACE.

Liquidity ratios serve as tools for assessing a business's immediate financial stability – specifically, its capability to fulfill present commitments. This evaluation hinges on scrutinizing the quantities of current assets and current liabilities detailed within the balance sheet. The pair of ratios falling under this classification encompass the current ratio and the liquid ratio.

A) Current ratio- Liquidity ratio. Current ratio is the proportion of current assets to current liabilities. It is expressed as follows: Current Ratio = Current Assets/Current Liabilities.

B) Earning per share- Profitability ratio. Earning per share is calculated to find out the earning earned by shareholders per share. It is expressed as follows-  Profit available for Equity Shareholders/Number of Equity Shares.

C) Quick ratio- Liquidity ratio. Quick ratio is the another name for the liquid ratio. It is the ratio of quick (or liquid) asset to current liabilities. It is expressed as Quick ratio = Quick Assets/ Current Liabilities.

D) Proprietary ratio- Solvency ratio. Proprietary ratio expresses relationship of proprietor’s (shareholders) funds to net assets and is calculated as follows : Proprietary Ratio = Shareholders’, Funds/Capital employed (or net assets).

E) Liquid ratio- Liquidity ratio. Liquid ratio is the ratio of quick (or liquid) asset to current liabilities. It is expressed as Quick ratio = Quick Assets/ Current Liabilities.