An example of a liquidity ratio is _______.

Question

Quizplus · Accepted Answer

The best choice for a liquidity ratio is either the current ratio or the acid test/quick ratio. The current ratio measures a company's ability to pay off its short-term liabilities using its current assets, while the acid test/quick ratio measures a company's ability to pay off its short-term liabilities using only its most liquid assets. Both of these ratios are commonly used to assess a company's liquidity position, so the correct answer is E, which includes both options.

An Example of a Liquidity Ratio Is _______