Liquidity ratios include the _____.
A) price-earnings ratio
B) debt-equity ratio
C) dividend payout ratio
D) inventory turnover ratio

Question

Quizplus · Accepted Answer

Liquidity ratios are ratios that measure a company's ability to meet its short-term obligations. Inventory turnover ratio is a liquidity ratio that measures how quickly a company is able to sell its inventory and convert it into cash. A higher inventory turnover ratio indicates that a company is able to sell its inventory quickly and efficiently, thus improving its liquidity. A, B, and C are not liquidity ratios, but rather profitability and solvency ratios.

Liquidity Ratios Include the _____