Which of the measures below is used to measure liquidity?
A)Current ratio
B)Debt-to-assets ratio
C)Price ÷ Earnings ratio
D)Times interest earned

Question

Quizplus · Accepted Answer

The current ratio is used to measure liquidity,and is calculated as: Current Assets ÷ Current Liabilities.It measures the ability of a company to pay its short term obligation with current assets.The Price ÷ Earnings ratio is a profitability measure.The debt-to-assets and the times interest earned ratios are used to measure solvency.

Which of the Measures Below Is Used to Measure Liquidity