The most common analytical procedure to assess liquidity is the:
A) inventory turnover ratio.
B) quick ratio.
C) debt to equity ratio.
D) net profit margin.

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, is the most common analytical procedure to assess liquidity. It measures a company's ability to use its most liquid assets (cash, marketable securities, and accounts receivable) to pay off its current liabilities. A higher quick ratio indicates a better ability to meet short-term obligations, which is an important aspect of financial health for any business.

The Most Common Analytical Procedure to Assess Liquidity Is The