Which of the following is true of the liquidity ratio?
A) It indicates how easily an organization's assets are converted into cash.
B) It reflects an organization's ability to meet long-term financial obligations.
C) It shows managers and investors how much return an organization is generating relative to its assets.
D) It helps estimate an organization's ability to cover interest expenses on borrowed capital.
E) It indicates the effectiveness of specific functional areas in an organization.

Question

Quizplus · Accepted Answer

Liquidity ratios indicate how liquid, or easily converted into cash, an organization's assets are.

Which of the Following Is True of the Liquidity Ratio