The two basic measures of liquidity are
A) inventory turnover and current ratio.
B) current ratio and total asset turnover.
C) current ratio and quick ratio.
D) gross profit margin and ROE.

Question

Quizplus · Accepted Answer

The two basic measures of liquidity are the current ratio and the quick ratio. The current ratio measures a company's ability to pay off its short-term liabilities using its current assets, while the quick ratio is a more stringent measure of liquidity that excludes inventory from current assets.

The Two Basic Measures of Liquidity Are