The liquidity of a business is:
A)often measured by a ratio of current assets to current liabilities.
B)not important to a company's financial health.
C)the ability of the business to sell its products quickly.
D)a measurement of spontaneous financing.

Question

Quizplus · Accepted Answer

The liquidity of a business refers to its ability to meet short-term financial obligations. This is often measured by a ratio of current assets (such as cash, inventory, and accounts receivable) to current liabilities (such as accounts payable and short-term debt). The higher the ratio, the more liquid the business is considered to be. It is an important factor in determining a company's financial health and ability to continue operations in the short term.

The Liquidity of a Business Is