Which of the following ratios indicates the number of months in which living expenses can be paid if an emergency arises?

Question

Quizplus · Accepted Answer

The liquidity ratio measures the ability of a household or individual to pay off debts in the short term, such as in an emergency situation. It is calculated by dividing liquid assets by monthly expenses. Therefore, a higher liquidity ratio means that there are more months of expenses that can be covered in case of an emergency, indicating a greater level of financial security.

Which of the Following Ratios Indicates the Number of Months