A company's liquidity refers to its:
A)Ability to collect accounts receivable.
B)Ability to sell inventory efficiently.
C)Ability to generate profits from operations.
D)Ability to pay currently maturing debts.

Question

Quizplus · Accepted Answer

Liquidity refers to a company's ability to pay its debts as they come due. Therefore, the ability to pay currently maturing debts is the best choice as it directly relates to liquidity. Options A and B are related to operating efficiency, while option C is related to profitability.

A Company's Liquidity Refers to Its