Which of the Following Is a Difference Between Liquidity Ratios

Multiple Choice

Which of the following is a difference between liquidity ratios and leverage ratios?

A) Liquidity ratios measure how effectively a firm uses its assets to generate revenue, whereas leverage ratios compare the amount of profit to some measure of resources invested.
B) Liquidity ratios compare the amount of profit to some measure of resources invested, whereas leverage ratios measure how effectively a firm uses its assets to generate revenue.
C) Liquidity ratios measure a firm's ability to pay its short-term liabilities as they come due, whereas leverage ratios measure the extent to which a firm relies on debt to meet its financing needs.
D) Liquidity ratios measure the net income per share of common stock outstanding, whereas leverage ratios indicate the earnings per dollar by the owners of a company.