If the ABC Farmer's Bank has total assets of $100 million, of which $20 million are in liquid form, the bank's liquidity ratio is:

Question

Quizplus · Accepted Answer

The liquidity ratio is calculated by dividing the bank's liquid assets by its total assets. In this case, the bank's liquid assets are $20 million and its total assets are $100 million, so the liquidity ratio is $20 million / $100 million = 0.2, or 20%.

If the ABC Farmer's Bank Has Total Assets of $100