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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.
-A liquidity ratio measures the
A) net income or operating success of a company over a period of time.
B) ability of the company to survive over a long period of time.
C) short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash.
D) ability of a company to raise capital.

Question

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Liquidity ratios assess a company's ability to cover its short-term liabilities with its short-term assets, indicating its capacity to meet immediate financial obligations.

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