The current and inventory turnover ratios both help us measure a firm's liquidity. The current ratio measures the relationship of the firm's current assets to its current liabilities, while the inventory turnover ratio gives us an indication of how long it takes the firm to convert its inventory into cash.

Question

Quizplus · Accepted Answer

The statement is correct. The current ratio and inventory turnover ratio are both used to evaluate a firm's liquidity.

The Current and Inventory Turnover Ratios Both Help Us Measure