Match the LIST-I with LIST-IILIST-ILIST-IIA.The ratio provides a meas…

Match the LIST-I with LIST-II

LIST-I		LIST-II
A.	The ratio provides a measure of the capacity of the business to meet its short-term obligations without any flaw.	I.	Total Assets to Debt Ratio
B.	This ratio measures the extent of the coverage of long-term debts by assets.	II.	Interest Coverage Ratio
C.	This ratio indicates the number of times receivables are turned over and converted into cash in an accounting period.	III.	Quick Ratio
D.	It is a ratio which deals with the servicing of interest on loans. It is a measure of security of interest payable on long-term debts.	IV.	Trade Receivables Turnover Ratio

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → A-III, B-I, C-IV, D-II

Each description in List-I is the stated purpose of one ratio: two test solvency, one liquidity and one the speed of collection.

(A) The ratio provides a measure of the capacity of the business to meet its short-term obligations without any flaw. — this matches (III) Quick Ratio. It compares quick (liquid) assets with current liabilities, leaving out inventory and prepaid expenses, so it tests short-term paying capacity strictly.

(B) This ratio measures the extent of the coverage of long-term debts by assets. — this matches (I) Total Assets to Debt Ratio. It is total assets divided by long-term debts; a higher ratio means the lenders are better covered.

(C) This ratio indicates the number of times receivables are turned over and converted into cash in an accounting period. — this matches (IV) Trade Receivables Turnover Ratio. It is credit revenue from operations divided by average trade receivables; a higher turnover means faster collection.

(D) It is a ratio which deals with the servicing of interest on loans. It is a measure of security of interest payable on long-term debts. — this matches (II) Interest Coverage Ratio. It compares the profit available for paying interest with the interest payable.

NCERT (2026-27 edition):
Quick or Liquid Ratio – “It is the ratio of quick (or liquid) asset to current liabilities.”

NCERT (2026-27 edition):
Quick or Liquid Ratio – “… Significance: The ratio provides a measure of the capacity of the business to meet its short-term obligations without any flaw.”

NCERT (2026-27 edition):
Total Assets to Debt Ratio – “This ratio measures the extent of the coverage of long-term debts by assets.”

NCERT (2026-27 edition):
Interest Coverage Ratio – “It is a ratio which deals with the servicing of interest on loan. It is a measure of security of interest payable on long-term debts.”

NCERT (2026-27 edition):
Trade Receivables Turnover Ratio – “… Significance: The liquidity position of the firm depends upon the speed with which trade receivables are realised. This ratio indicates the number of times the receivables are turned over and converted into cash in an accounting period.”