Liquidity analysis is required to
A)evaluate a company's profitability.
B)assess a company's ability to pay its current liabilities.
C)be reported in the financial statements for all publicly-traded companies.
D)provide information about a company's capital structure.

Question

Quizplus · Accepted Answer

Liquidity analysis is used to assess a company's ability to pay its current liabilities, such as short-term debts and accounts payable. It examines the company's current assets, such as cash and inventory, to determine if they can cover these liabilities. It is not primarily used for evaluating profitability, reporting in financial statements, or providing information about capital structure.

Liquidity Analysis Is Required to