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Nelly Inc. reported net credit sales of $24,000,000 and cost of goods sold of $18,000,000 for the year. The average inventory for the year was $6,000,000.
-Which one of the following would not be considered a liquidity ratio?
A) current ratio
B) inventory turnover ratio
C) receivables turnover ratio
D) return on assets ratio

Question

Quizplus · Accepted Answer

Return on assets ratio is a profitability ratio, not a liquidity ratio. Liquidity ratios measure a company's ability to meet its short-term obligations, while return on assets measures how efficiently a company uses its assets to generate profit.

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