Match List I with List II LIST I LIST II A. Liquidity Ratio I. Propri…

Match List I with List II

LIST I	LIST II
A. Liquidity Ratio	I. Proprietary Ratio
B. Solvency Ratio	II. Trade Receivable turnover Ratio
C. Activity Ratio	III. Operating Ratio
D. Profitability Ratio	IV. Current Ratio

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → A-IV, B-I, C-II, D-III

Ratios are grouped by what they measure:

(A) Liquidity Ratio — this matches (IV) Current Ratio. It tests the short-term paying capacity.

(B) Solvency Ratio — this matches (I) Proprietary Ratio. It tests the long-term ability to meet debts.

(C) Activity Ratio — this matches (II) Trade Receivable turnover Ratio. Turnover ratios show how fast resources are used.

(D) Profitability Ratio — this matches (III) Operating Ratio. It relates operating cost to revenue, so it shows earning capacity.

NCERT (2026-27 edition):
Summary – “… There are many types of ratios, viz., liquidity, solvency, activity and profitability ratios. The liquidity ratios include current ratio and acid test ratio. Solvency ratios are calculated to determine the ability of the business to service its debt in the long run instead of in the short run. They include debt equity ratio, total assets to debt ratio, proprietary ratio and interest coverage ratio.”

NCERT (2026-27 edition):
Summary – “… The turnover ratios basically exhibit the activity levels characterised by the capacity of the business to make more sales or turnover and include Inventory Turnover, Trade Receivables Turnover, Trade Payables Turnover, Working Capital Turnover, Fixed Assets Turnover and Current assets Turnover.”

NCERT (2026-27 edition):
Summary – “… Profitability ratios are calculated to analyse the earning capacity of the business which is the outcome of utilisation of resources employed in the business. The ratios include Gross Profit ratio, Operating ratio, Net Profit Ratio, Return on investment (Capital employed), Earnings per Share, Book Value per Share, Dividend per Share and Price/Earning ratio.”