According to financial controls, liquidity measures _____.
A) the ability to meet short-term obligations
B) the use of debt
C) asset and inventory efficiency
D) the ability to earn revenues greater than costs
E) the ability to operate at minimum cost

Question

Quizplus · Accepted Answer

Liquidity measures are a way to determine if a company has enough cash and assets that can be easily converted to cash to meet short-term obligations, such as paying bills and salaries. Liquidity measures take into account the company's current assets and liabilities, including accounts receivables, inventory, and short-term debt. Therefore, option A is the correct answer as it is the only choice that correctly describes liquidity measures.

According to Financial Controls, Liquidity Measures _____