A liquidity ratio of 9 indicates that a business ____.
A) will run out of money in 9 days
B) has liquid assets equivalent to the costs of 9 days of operation
C) has 9 times as much assets as debts
D) is 9 times more likely to fail than average

Question

Quizplus · Accepted Answer

The liquidity ratio measures a company's ability to meet its short-term obligations. A liquidity ratio of 9 indicates that the company has liquid assets equivalent to the costs of 9 days of operation.

A Liquidity Ratio of 9 Indicates That a Business ____