Match List-I with List-II

List-I	List-II
(A) Measure of liquidity	(I) Return on capital employed
(B) Measure of earning capacity	(II) Inventory turnover ratio
(C) Measure of activity of firm's inventory	(III) Profitability ratio
(D) Measure of Productive efficiency of funds	(IV) Current ratio

Choose the correct answer from the options given below:

(A) Measure of liquidity → (IV) Current ratio

Liquidity ratios measure a firm's ability to meet its short-term obligations. Current Ratio = $\frac{\text{Current Assets}}{\text{Current Liabilities}}$ is a key liquidity ratio that indicates whether the firm has enough short-term assets to cover short-term liabilities.

(B) Measure of earning capacity → (III) Profitability ratio

Earning capacity refers to the firm's ability to generate profits from its operations. Profitability ratios like Gross Profit Ratio, Net Profit Ratio, and Operating Profit Ratio directly measure how effectively the firm earns profits.

(C) Measure of activity of firm's inventory → (II) Inventory turnover ratio

Activity ratios measure how efficiently a firm utilizes its assets. Inventory Turnover Ratio = $\frac{\text{Cost of Revenue from Operations}}{\text{Average Inventory}}$ specifically measures how many times inventory is sold and replaced during a period, indicating the efficiency of inventory management.

(D) Measure of Productive efficiency of funds → (I) Return on capital employed

Return on Capital Employed (ROCE) = $\frac{\text{Profit before Interest and Tax}}{\text{Capital Employed}} \times 100$ measures how efficiently the funds invested in the business are being utilized to generate returns. It shows the productive efficiency of the capital/funds employed.

The correct matching is: (A)-(IV), (B)-(III), (C)-(II), (D)-(I)

Option 2 is correct.