Asked by Abigail Rodefer on May 07, 2024
Verified
A common measure of liquidity is
A) the asset turnover ratio
B) dividends per share of common stock
C) the accounts receivable turnover
D) the profit margin
Liquidity
The simplicity of turning an asset into cash without impacting its market value.
Asset Turnover Ratio
A financial metric that measures the efficiency of a company using its assets to generate sales or revenue.
- Examine the liquidity of a firm by calculating its current ratio and comprehend its importance.
Verified Answer
NH
Nihan HotamisliMay 12, 2024
Final Answer :
C
Explanation :
The accounts receivable turnover ratio measures how efficiently a company collects its outstanding debts from customers. A higher accounts receivable turnover indicates that a company is collecting its debts more quickly and has more cash available for operations, making it a good indicator of liquidity. The other measures listed are more related to profitability and efficiency, rather than liquidity.
Learning Objectives
- Examine the liquidity of a firm by calculating its current ratio and comprehend its importance.