A liquidity ratio measures the
A) income or operating success of an enterprise over a period of time.
B) ability of the enterprise to survive over a long period of time.
C) short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash.
D) number of times interest is earned.

Question

Quizplus · Accepted Answer

A liquidity ratio measures the ability of the enterprise to pay its maturing obligations and meet unexpected needs for cash in the short-term. It does not measure income or operating success over a period of time, nor does it measure the ability of the enterprise to survive over a long period of time. The number of times interest is earned is measured by an interest coverage ratio.

A Liquidity Ratio Measures the