Asked by Abhishek Chaudhary on May 31, 2024
Verified
The ease with which an asset can be converted into cash is termed
A) financial flexibility
B) liquidity
C) operating capability
D) capital maintenance
Liquidity
The ease with which an asset or security can be converted into ready cash without affecting its market price.
Asset
An asset is a resource owned or controlled by an individual, corporation, or government with the expectation that it will produce positive economic value.
Cash
A form of liquid asset that includes currency and other easily accessible bank balances.
- Interpret the significance and utility of financial flexibility and liquidity in the evaluation of financial analysis.
Verified Answer
SB
Scott BurlinghamJun 04, 2024
Final Answer :
B
Explanation :
Liquidity refers to the ease with which an asset can be converted into cash, making it an important factor in managing cash flow and financial stability. Financial flexibility and operating capability are related concepts, but do not specifically refer to the ease of converting assets into cash. Capital maintenance refers to the preservation of the value of an entity's assets over time.
Learning Objectives
- Interpret the significance and utility of financial flexibility and liquidity in the evaluation of financial analysis.