Which of the following are measures of liquidity?
I. net working capital
II. net profit margin
III. current ratio
IV. times interest earned
A) I and III only
B) I, II and III only
C) I, II and IV only
D) I, III and IV only

Question

Quizplus · Accepted Answer

Liquidity measures a company's ability to meet its short-term obligations. Net working capital and the current ratio are direct measures of liquidity, assessing the ability to cover short-term liabilities with short-term assets. Net profit margin and times interest earned are profitability and solvency measures, respectively, not liquidity measures.

Which of the Following Are Measures of Liquidity