An example of a liquidity ratio is ______.
A) fixed asset turnover
B) current ratio
C) acid test or quick ratio
D) a and c
E) b and c

Question

Quizplus · Accepted Answer

A liquidity ratio indicates a company's ability to meet short-term obligations with its current assets. The current ratio and acid test or quick ratio are both examples of liquidity ratios. Fixed asset turnover is not a liquidity ratio, as it measures the efficiency of a company's use of fixed assets to generate sales. Therefore, the best choice(s) are b and c, which are the current ratio and acid test or quick ratio.

An Example of a Liquidity Ratio Is ______