Liquidity ratios are an indication of a company's
A)ability to effectively employ its resources.
B)overall debt to equity position.
C)overall debt position.
D)ability to pay bills when they are due and to meet unexpected needs for cash.

Question

Quizplus · Accepted Answer

Liquidity ratios primarily measure a company's ability to pay its short-term obligations and meet unexpected cash needs. They are not directly related to the company's ability to effectively employ its resources or its overall debt position. Therefore, option D is the best choice.

Liquidity Ratios Are an Indication of a Company's