A firm that wants to know if it has enough cash to meet its bills would be most likely to use which kind of ratio?
A) liquidity
B) leverage
C) efficiency
D) profitability

Question

Quizplus · Accepted Answer

Liquidity ratios are used to determine a company's ability to meet its short-term obligations. This includes the ability to pay bills and other current liabilities. Therefore, a firm that wants to know if it has enough cash to meet its bills would most likely use a liquidity ratio such as the current ratio, which measures a company's current assets relative to its current liabilities.

A Firm That Wants to Know If It Has Enough