A common measure of liquidity is
A) return on assets.
B) accounts receivable turnover.
C) profit margin.
D) debt to equity.

Question

Quizplus · Accepted Answer

Accounts receivable turnover is a measure of the liquidity of a company's receivables, representing how quickly a company is able to collect payment from credit sales. It is calculated by dividing net credit sales by the average accounts receivable balance over a given period of time. A higher accounts receivable turnover ratio indicates that a company is able to collect payment more quickly, indicating better liquidity.

A Common Measure of Liquidity Is