________ is a measure of how well a firm can meet its short-term cash requirements.
A) Leverage (total debt/total assets)
B) Liquidity (current assets/current liabilities)
C) Inventory turnover (annual sales/inventory)
D) Return on equity (net profit before taxes/total assets invested)

Question

Quizplus · Accepted Answer

Liquidity is a measure of a firm's ability to meet its short-term cash obligations. It is calculated by dividing current assets by current liabilities. A higher ratio indicates better liquidity and a lower risk of defaulting on short-term obligations. Leverage is a measure of a firm's total debt to total assets, inventory turnover measures the speed of inventory turnover, and return on equity measures the return on shareholders' investment.

________ Is a Measure of How Well a Firm Can