Match List-I with List-II
List-I
(A) Liquidity Ratio
(B) Solvency Ratio
(C) Turnover Ratio
(D) Profitability Ratio
List-II
(I) Indicates the speed at which, activities of the business are being performed.
(II) Analyse short term solvency of the business
(III) Calculated to analyse the earning capacity of the business which is the outcome of utilisation of resources employed in the business.
(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) - (II), (B) - (IV), (C) - (I), (D) - (III)
Ratios are grouped by the purpose they serve: paying short-term dues, meeting long-term debt, using resources, and earning profit.
(A) Liquidity Ratio — this matches (II) Analyse short term solvency of the business. Liquidity ratios, such as the current ratio and the acid test ratio, measure the firm's ability to meet its current obligations.
(B) Solvency Ratio — this matches (IV) Interest Coverage Ratio. Solvency ratios test the ability to service debt in the long run, and the interest coverage ratio is one of them, along with the debt-equity ratio.
(C) Turnover Ratio — this matches (I) Indicates the speed at which, activities of the business are being performed. Turnover (activity) ratios show how many times assets are turned into sales.
(D) Profitability Ratio — this matches (III) Calculated to analyse the earning capacity of the business which is the outcome of utilisation of resources employed in the business. Profitability ratios, such as gross profit and net profit ratios, measure earning capacity.
NCERT (2026-27 edition):
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