Match List I with List II List I List II A. Liquidity Ratio I. Operat…

Match List I with List II

List I	List II
A. Liquidity Ratio	I. Operating Ratio
B. Solvency Ratio	II. Working Capital Turnover Ratio
C. Activity Ratio	III. Quick Ratio
D. Profitability Ratio	IV. Interest Coverage Ratio

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → A-III, B-IV, C-II, D-I

(A) Liquidity Ratio — this matches (III) Quick Ratio. The quick (liquid or acid-test) ratio measures short-term solvency.

(B) Solvency Ratio — this matches (IV) Interest Coverage Ratio. It tests the ability to service debt in the long run.

(C) Activity Ratio — this matches (II) Working Capital Turnover Ratio. Turnover ratios show the level of activity.

(D) Profitability Ratio — this matches (I) Operating Ratio. It relates operating cost to revenue and so measures earning capacity.

NCERT (2026-27 edition):
Liquidity Ratios – “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. The two ratios included in this category are current ratio and liquidity ratio.”

NCERT (2026-27 edition):
Quick or Liquid Ratio

Extract from the NCERT textbook

NCERT (2026-27 edition):
Summary – “… 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.”