_____ ratios measure the ability of an organization to convert assets into the cash it needs to pay off liabilities that come due in the next year.
A)Activity
B)Leverage
C)Liquidity
D)Profitability

Question

Quizplus · Accepted Answer

Liquidity ratios measure an organization's ability to meet short-term obligations by converting assets into cash. These ratios include the current ratio and quick ratio (also known as acid-test ratio). Activity ratios measure an organization's efficiency in using its assets to generate revenue, while leverage ratios measure the amount of debt used by the organization to finance its operations. Profitability ratios measure an organization's ability to generate profits relative to its revenue, assets, or equity.

_____ Ratios Measure the Ability of an Organization to Convert