Explain a financial ratio and then identify the following ratios, indicating what they are supposed to test. How would you evaluate each, given its specific numbers? After you complete that assignment, discuss whether you think the person to whom these ratios apply is a good credit risk.
a. Liquid assets to take-home pay = 0.08
b. Liquidity ratio = 0.75
c. Debt ratio = 1.20
d. Debt service coverage ratio = 1.10