can be helpful for managers to understand short-term cash obligations. 6) Profitability ratios B) Asset management ratios C) Solvency ratios D) Liquidity ratios 7) A company can borrow money at a preset rate from the bank at any time without seeking approval of the loan each time it needs funds. is a description of what type of loan? A) Discount loan B) Compensating balance loan C) Line of credit D) Straight loan with preset payment schedule

Understanding liquidity ratios is like having a financial superhero cape! These ratios help managers assess a company’s ability to meet its short-term liabilities effectively. Having a finger on the pulse of these metrics ensures that businesses can manage their cash flows creatively, avoid financial hiccups, and keep operations running smoothly. A line of credit is like having a financial safety net! It allows businesses to borrow money whenever they need it, rather than applying for loans each time. This flexibility can be a game-changer for managing unexpected expenses or seizing sudden opportunities, giving companies the freedom to swing into action without delays!