Which of the following is generally true regarding liquidity as it relates to the firm?
A) Liquidity is detrimental to a firm because it allows the firm to pay its bills more easily, thereby avoiding financial distress.
B) Liquidity is valuable to a firm because liquid assets can be sold quickly without much loss in value.
C) Liquidity is valuable to a firm because a firm can borrow money using its liquid assets, such as a warehouse, as collateral.
D) Assets are generally listed on a firm's statement of financial position in the order of increasing liquidity.
E) Liquid assets generally earn a large return, especially in comparison to illiquid assets.

Question

Quizplus · Accepted Answer

Liquidity is valuable because it means assets can be quickly converted into cash with minimal loss in value, which is crucial for meeting short-term obligations and ensuring operational flexibility.

Which of the Following Is Generally True Regarding Liquidity as It