How many of the following statements are true? Liquidity refers to a company's ability to pay current obligations or debts.
A company is always considered a serious credit risk if its quick ratio is below one.
All other things equal, the existence of a line of credit enhances the ability of a company to meet its short-term obligations.
Liquid assets include all current assets.
A) One
B) Two
C) Three
D) Four

Question

Quizplus · Accepted Answer

Liquidity refers to a company's ability to pay current obligations, and a line of credit enhances this ability. However, a quick ratio below one does not always mean a company is a serious credit risk, and liquid assets do not include all current assets (e.g., inventory is not considered liquid).

How Many of the Following Statements Are True? Liquidity Refers