A common measure of liquidity is
A) the ratio of sales to assets
B) dividends per share of common stock
C) the accounts receivable turnover
D) the profit margin

Question

Quizplus · Accepted Answer

The accounts receivable turnover measures how quickly a company collects its outstanding receivables, which is a key indicator of its ability to generate cash and meet short-term obligations. A higher turnover ratio indicates better liquidity, as it means the company is collecting its receivables more quickly. Choices A, B, and D are measures of profitability, not liquidity.

A Common Measure of Liquidity Is