Evaluating Liquidity Ratios for Solvency Steps: - Current ratio = current assets / current liabilities; >1 indicates sufficiency, higher value shows easier meeting of liabilities. - Ewa's current ratio (2.2:1) < Max's (2.4:1), so statement 1 is false—Max meets current liabilities more easily. - Liquid ratio = (current assets - inventory) / current liabilities; >1 indicates sufficiency, higher value shows easier meeting from liquid assets. - Ewa's liquid ratio (1.4:1) > Max's (1.0:1), so statement 2 is true—Ewa meets liquid liabilities more easily. - Max's current ratio (2.4:1) >1, so statement 3 is false—he has sufficient current assets. - Max's liquid ratio (1.0:1) =1, so statement 4 is true—he has sufficient liquid assets to meet liabilities exactly. Why D is correct: - D pairs statements 2 and 4, which are true per liquidity ratio definitions showing adequate coverage (> or =1). Why the others are wrong: - A: Includes false statement 1 (Max's higher current ratio) and false 3 (Max exceeds 1). - B: Includes false statement 1 (ignores Max's superior current ratio). - C: Includes false statement 3 (Max's …