Trade Receivables Turnover Ratio and Trade Payables Turnover Ratio are categorised as:

The correct option is Activity Ratio.

Let us understand why this classification is correct by breaking down the nature and purpose of these ratios:

1. Understanding Activity Ratios:
Activity ratios, also known as efficiency ratios or turnover ratios, measure how effectively and efficiently a business enterprise utilizes its assets and resources (like receivables, payables, inventory, etc.) to generate sales or cash flows. They reflect the speed at which assets are converted into sales or cash.

2. Trade Receivables Turnover Ratio:
This ratio indicates the frequency with which a business collects its trade receivables (sundry debtors and bills receivable) during a financial year. It shows how quickly credit sales are converted into cash. A higher ratio indicates efficient credit management and collection policies.

3. Trade Payables Turnover Ratio:
This ratio measures the speed or frequency with which a business pays off its trade payables (sundry creditors and bills payable) to suppliers. It evaluates how effectively the credit period allowed by suppliers is managed and utilized.

Why other options are incorrect:
- Liquidity Ratios: These measure a firm's ability to meet its short-term obligations as they become due (e.g., Current Ratio, Quick Ratio).
- Solvency Ratios: These assess a firm's ability to meet its long-term financial commitments (e.g., Debt-to-Equity Ratio, Interest Coverage Ratio).
- Profitability Ratios: These measure the overall efficiency and pricing policies of a firm in generating earnings relative to its sales, assets, or equity (e.g., Gross Profit Margin, Net Profit Margin).

Therefore, because both Trade Receivables Turnover Ratio and Trade Payables Turnover Ratio evaluate the operational efficiency and turnover frequency of resources, they are categorized under Activity Ratios.