Asked by
Jessa Mae Lucas
on Nov 18, 2024Verified
Factors that reflect the ability of a business to pay its debts and earn a reasonable amount of income are referred to as solvency, profitability, and liquidity.
Solvency
The ability of a firm to pay its debts as they come due.
Liquidity
The ability of an asset to be quickly converted into cash without significant loss of value, indicating the ease with which a company can meet its short-term financial obligations.
- Understand the significance of solvency, profitability, and liquidity in assessing a business's performance.
Verified Answer
OF
Learning Objectives
- Understand the significance of solvency, profitability, and liquidity in assessing a business's performance.