A firm's ability to pay its obligations as they come due and to meet any unforeseen needs for cash is called

Question

Quizplus · Accepted Answer

The term "liquidity" refers specifically to a firm's ability to meet its short-term obligations and unexpected cash needs. While measures like the current ratio and working capital are also important indicators of a firm's financial health, neither focuses specifically on short-term liquidity. Accounts receivable turnover is a measure of how frequently a firm's receivables are converted to cash, and is not directly related to liquidity.

A Firm's Ability to Pay Its Obligations as They Come