What can an analyst learn from the liquidity indicators?
A)the amount of cash than an entity can obtain from liquidating its capital assets
B)the amount of cash needed to liquidate its long-term debt
C)the amount that an entity is likely to realize from selling all of its assets
D)the ability of an entity to meet its short-term obligations

Question

Quizplus · Accepted Answer

Liquidity indicators provide information on an entity's ability to meet its short-term obligations. This includes the amount of cash and other liquid assets that can be used to pay off its current liabilities. Examples of liquidity indicators include the current ratio, quick ratio, and cash ratio. While the other choices involve liquidation or selling of assets, they are not necessarily related to an entity's ability to meet its short-term obligations.

What Can an Analyst Learn from the Liquidity Indicators