Liquidity refers to:
A) the ability of a company to earn a profit
B) a comparison of account balances to a single line item
C) the ability of a company to pay its debts when they fall due
D) None of the above

Question

Quizplus · Accepted Answer

Liquidity refers to the ability of a company to pay its debts when they fall due. It is a measure of the company's ability to convert its assets into cash to meet its short-term obligations. A company that is highly liquid is able to manage its debts effectively and is less likely to face financial distress.

Liquidity Refers To