Match List-I with List-II

List-I	List-II
(A) Liquidity Ratio	(I) Trade payable Turnover Ratio
(B) Solvency Ratio	(II) Quick Ratio
(C) Activity Ratio	(III) Proprietary Ratio
(D) Profitability Ratio	(IV) Price earning ratio

Choose the correct answer from the options given below:

Understanding the categories of ratios:

Liquidity Ratios measure a firm's ability to meet short-term obligations. Quick Ratio (also called Acid Test Ratio) is a key liquidity ratio that excludes inventory from current assets to assess immediate liquidity.

Formula: Quick Ratio = $\frac{\text{Quick Assets}}{\text{Current Liabilities}}$ = $\frac{\text{Current Assets - Inventory - Prepaid Expenses}}{\text{Current Liabilities}}$

Solvency Ratios measure a firm's ability to meet long-term obligations and assess financial stability. Proprietary Ratio shows the relationship between shareholders' funds and total assets.

Formula: Proprietary Ratio = $\frac{\text{Shareholders' Funds}}{\text{Total Assets}}$

Activity Ratios measure the efficiency with which a business uses its resources. Trade Payable Turnover Ratio measures how quickly a business pays its creditors.

Formula: Trade Payable Turnover Ratio = $\frac{\text{Net Credit Purchases}}{\text{Average Trade Payables}}$

Profitability Ratios measure the earning capacity and returns of a business. Price Earning Ratio indicates market perception of a company's earnings potential.

Formula: Price Earning Ratio = $\frac{\text{Market Price per Share}}{\text{Earnings per Share}}$

Correct Matching:

• (A) Liquidity Ratio → (II) Quick Ratio
• (B) Solvency Ratio → (III) Proprietary Ratio
• (C) Activity Ratio → (I) Trade Payable Turnover Ratio
• (D) Profitability Ratio → (IV) Price Earning Ratio

This corresponds to (A)-(II), (B)-(III), (C)-(I), (D)-(IV), which is Option 2.