The financial ratio of liquidity indicates how well the organization can meet its long-term financial obligations.

Question

Quizplus · Accepted Answer

The financial ratio of liquidity indicates how easily an organization can convert its assets into cash to meet its short-term financial obligations, not its long-term ones. Long-term financial obligations are evaluated by ratios such as debt-to-equity, interest coverage, and debt service coverage.

The Financial Ratio of Liquidity Indicates How Well the Organization