Liquidity ratios are used to determine whether or not a ________.
A)company's stock is a good investment
B)company can earn a satisfactory rate of return
C)company can pay its bills on time
D)company can survive over a long period of time

Question

Quizplus · Accepted Answer

Liquidity ratios are used to assess a company's ability to meet its short-term obligations, including paying bills and other debts that are due in the near future. Therefore, option C is the best choice because it directly relates to the purpose of liquidity ratios. The other options - A, B, and D - are not accurate because liquidity ratios do not necessarily indicate whether a company's stock is a good investment, whether a company can earn a satisfactory rate of return, or whether a company can survive over a long period of time.

Liquidity Ratios Are Used to Determine Whether or Not a ________