An example of a liquidity ratio is the
A)quick ratio.
B)debt ratio.
C)interest coverage ratio.
D)return on assets.

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, is a liquidity ratio that measures a company's ability to meet short-term obligations using its most liquid assets. It excludes inventory from its calculation to provide a more conservative estimate of a company's liquidity position. A higher quick ratio indicates a better ability to cover short-term obligations.

An Example of a Liquidity Ratio Is the