A good measure of whether a not-for-profit organization is "liquid" and can meet its short-term obligations is:
A) Percentage of program expenses to total expenses.
B) Total revenues divided by total expenses.
C) Current assets divided by current liabilities.
D) Percentage of unrestricted net assets to operating expenses.

Question

Quizplus · Accepted Answer

The ratio of current assets to current liabilities is known as the current ratio, and it is a measure of the organization's liquidity. A current ratio of 1.0 or higher is generally considered good, indicating that the organization can meet its short-term obligations. Choices A, B, and D do not provide information on an organization's liquidity.

A Good Measure of Whether a Not-For-Profit Organization Is "Liquid