A common measure of liquidity is
A) Return on assets.
B) Accounts receivable turnover.
C) Profit margin.
D) Debt to equity.

Question

Quizplus · Accepted Answer

Accounts receivable turnover is a common measure of liquidity as it indicates how quickly a company's customers are paying their bills. A higher accounts receivable turnover indicates that a company is able to collect its debts quickly and efficiently, which is a sign of good liquidity. Return on assets, profit margin, and debt to equity are measures of profitability and financial leverage, not liquidity.

A Common Measure of Liquidity Is