The correct answer is: A. a-2, b-1, c-4, d-3
Leverage ratio measures the relationship between debt and equity. It shows how much debt a company has compared to its equity. A high leverage ratio indicates that a company is using a lot of debt to finance its operations. This can be risky, as it means that the company is more likely to go bankrupt if it cannot make its debt payments.
Liquidity ratio measures a company’s ability to meet its short-term obligations. It is calculated by dividing current assets by current liabilities. A high liquidity ratio indicates that a company has a lot of liquid assets, which are assets that can be easily converted into cash. This means that the company is more likely to be able to meet its short-term obligations.
Turnover ratio measures the efficiency with which a company uses its assets to generate sales. It is calculated by dividing sales by average assets. A high turnover ratio indicates that a company is using its assets efficiently to generate sales. This means that the company is more likely to be profitable.
Profitability ratio measures a company’s ability to generate profits. It is calculated by dividing net income by sales. A high profitability ratio indicates that a company is generating a lot of profits from its sales. This means that the company is more likely to be successful.
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