Someone with a monthly income of $5000,$5000 in their checking account and monthly expenses of $5000 would have Liquidity Ratio of 2.

Question

Quizplus · Accepted Answer

The Liquidity Ratio is usually calculated by dividing the liquid assets (cash or cash equivalents) by the monthly expenses. In this case, the person has $5000 in their checking account, which can be considered a liquid asset, and monthly expenses of $5000. Therefore, the Liquidity Ratio would be 1, not 2.

Someone with a Monthly Income of $5000,$5000 in Their Checking