17-20 The liquidity index should be a number that is either greater than one or less than zero.

Question

Quizplus · Accepted Answer

The liquidity index is calculated as the quotient of current assets divided by current liabilities. As a result, it cannot be less than zero, as it would imply that a company has a negative amount of current assets. Similarly, it cannot be greater than one as it would indicate that a company has more current assets than it has current liabilities, which is not possible. Therefore, the liquidity index must always be between zero and one.

17-20 the Liquidity Index Should Be a Number That Is