Which of the following is a measure of liquidity?
A)Return on equity
B)Return on assets
C)Working capital
D)Profit margin

Question

Quizplus · Accepted Answer

Working capital is a measure of a company's liquidity as it indicates a company's ability to pay off its short-term debts and obligations. It is calculated by subtracting current liabilities from current assets. Return on equity (A) measures a company's profitability in relation to the shareholder's equity, return on assets (B) measures a company's profitability in relation to its total assets, and profit margin (D) measures a company's profitability by comparing its revenue to its expenses.

Which of the Following Is a Measure of Liquidity