Liquidity is:
A) a measure of the use of debt in a firm's capital structure.
B) equal to current assets minus current liabilities.
C) equal to the market value of a firm's total assets minus its current liabilities.
D) valuable to a firm even though liquid assets tend to be less profitable to own.
E) generally associated with intangible assets.

Question

Quizplus · Accepted Answer

Liquidity is valuable to a firm because it ensures that the firm can meet its short-term obligations, even though liquid assets like cash or marketable securities typically yield lower returns compared to other investments.

Liquidity Is