Trumbeak Inc., an electronics company, needs to pay its debt to Breston Bank the following year. Trumbeak Inc. sells half of its shares to other companies and is able to acquire the cash it needs to pay its debt. In this scenario, Trumbeak Inc.'s ability to sell its shares to other companies in order to pay its debt to Breston Bank is measured by calculating _____.

Liquidity ratios : These are the ratios that measure the capability of a company to meet its short term debt commitments .They show the number of times the short term debt obligations are covered by the cash and liquid assets. The following are examples of liquidity ratios

a) current ratio

b) cash ratio

c) quick ratio

d) working capital ratio .

Current ratio : This ratio juxtapose current assets to current liabilities.

Cash ratio : This ratio juxtapose just cash and investments which are readily convertible to current liabilities.

Wajihawaseem7 Wajihawaseem7 · Answer 2 · 2020-03-22T12:21:19+01:00

Answer:

Answer is liquidity ratios. Therefore,

Trumbeak Inc., an electronics company, needs to pay its debt to Breston Bank the following year. Trumbeak Inc. sells half of its shares to other companies and is able to acquire the cash it needs to pay its debt. In this scenario, Trumbeak Inc.'s ability to sell its shares to other companies in order to pay its debt to Breston Bank is measured by calculating liquidity ratios.

Refer below for the explanation.

Explanation:

Liquidity ratios are the ratios defining the ability of the firm to pay short term obligations.