When predicting a company's ability to generate cash in order to meet its bill payments, the ___ ratio needs to be calculated.
A) leverage
B) activity
C) profitability
D) liquidity
E) asset management

Question

Quizplus · Accepted Answer

The liquidity ratio measures a company's ability to pay off its short-term obligations using its current assets such as cash, accounts receivable, and inventory. This ratio is important in predicting a company's ability to generate cash in order to meet its bill payments.

When Predicting a Company's Ability to Generate Cash in Order