The following ratios primarily measure risk:
(A) Liquidity
(B) Activity
(C) Debts
(D) Profitability
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (C) and (D) only
Ratios that measure risk tell whether the business can meet what it owes and keep earning enough to stay safe: liquidity ratios (can it pay its short-term debts), debt ratios (how much of its funds are borrowed) and profitability ratios. Activity ratios only measure the speed at which assets turn into revenue or cash, so they are left out. This is the book’s own Test your Understanding item; its answer D (liquidity, debt and profitability) is the set in Option (2).
NCERT (2026-27 edition):
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