Which of the following defines a liquidity ratio?
A) revenue in relation to investment
B) current assets in relation to current liabilities
C) total debt in relation to total assets
D) amount of sales in relation to cost to produce

Question

Quizplus · Accepted Answer

Liquidity ratio measures a company's ability to pay off its short-term debt obligations. Current assets in relation to current liabilities is a widely used liquidity ratio known as the current ratio. This ratio helps lenders, investors, and creditors understand how easily a company can pay back its short-term obligations.

Which of the Following Defines a Liquidity Ratio