Asked by Nakaila Lovett on May 21, 2024
Verified
Which one of the following is considered a liquidity ratio?
A) debt ratio
B) receivables turnover
C) current ratio
D) profit margin
Liquidity Ratio
Measures a company's ability to meet its short-term obligations using its most liquid assets.
Profit Margin
A profitability ratio calculated by dividing net income by revenue, expressing the percentage of revenue that translates into net income.
- Appreciate the importance of liquidity, solvency, and profitability ratios in determining a company's financial stability.
Verified Answer
DA
Dhruv AgheraMay 25, 2024
Final Answer :
C
Explanation :
Current ratio is considered a liquidity ratio as it measures the ability of a company to pay off its current liabilities with its current assets. Debt ratio, receivables turnover, and profit margin are not liquidity ratios.
Learning Objectives
- Appreciate the importance of liquidity, solvency, and profitability ratios in determining a company's financial stability.