Which of the following characteristics of a company's financial position is analyzed by accounts receivable turnover and inventory turnover ratios?
A) The marketability
B) The profitability
C) The growth prospects
D) The liquidity

Question

Quizplus · Accepted Answer

Accounts receivable turnover and inventory turnover ratios are both used to analyze a company's liquidity, which refers to their ability to meet short-term financial obligations. The higher the turnover ratios, the more quickly the company is able to convert its receivables and inventory into cash, indicating greater liquidity.

Which of the Following Characteristics of a Company's Financial Position