Which of the following is a total dollar measure of liquidity?
A) accounts receivable turnover ratio
B) cash to cash operating cycle
C) number of days' sales in inventory
D) working capital

Question

Quizplus · Accepted Answer

Working capital is a total dollar measure of liquidity as it represents the difference between current assets and current liabilities, which indicates the amount of funds available to the company for day-to-day operations and unexpected needs. Accounts receivable turnover ratio, cash to cash operating cycle, and number of days' sales in inventory are all measures of efficiency and effectiveness rather than total dollar measures of liquidity.

Which of the Following Is a Total Dollar Measure of Liquidity