Which of the following is true of liquidity?
A) Liquidity metrics include assets turnover, price-earnings ratio, and dividend yield.
B) Liquidity is the ability to convert assets to cash.
C) Liquidity is the ability of a company to generate net income related to its invested assets.
D) Liquidity metrics include debt ratio, times interest earned, and ratio of liabilities to stockholders' equity.

Question

Quizplus · Accepted Answer

Liquidity refers to the ability to convert assets to cash, so option B is the correct choice. Options A and D include metrics that are not related to liquidity, and option C refers to profitability rather than liquidity.

Which of the Following Is True of Liquidity