An example of a liquidity ratio is the
A)quick ratio.
B)debt ratio.
C)times-interest-earned.
D)return on assets.

Question

Quizplus · Accepted Answer

Quick ratio is a type of liquidity ratio that evaluates a company's ability to meet its short-term obligations. It measures the amount of liquid assets a company has available to cover its current liabilities. A quick ratio of 1 or higher is considered healthy, indicating that a company has enough short-term assets to cover its immediate obligations. Debt ratio, times-interest-earned, and return on assets are not liquidity ratios, but rather solvency ratios or profitability ratios.

An Example of a Liquidity Ratio Is the