The two basic measures of liquidity are ________.
A) inventory turnover and current ratio
B) current ratio and quick ratio
C) gross profit margin and ROE
D) current ratio and total asset turnover

Question

Quizplus · Accepted Answer

The current ratio and quick ratio are the two basic measures of liquidity. The current ratio measures a company's ability to pay its current liabilities with its current assets, while the quick ratio measures its ability to pay its current liabilities with its most liquid assets (excluding inventory). Both ratios provide insight into a company's short-term solvency and ability to meet financial obligations. The other options listed are measures of profitability and asset efficiency, not liquidity.

The Two Basic Measures of Liquidity Are ________