Liquid Assets are equal to:

• B. Sum of cash and Bank Balances

This option is incorrect because it includes only cash and bank balances, which are a subset of liquid assets. Other liquid assets include short-term investments and accounts receivable.

• C. Current Assets less Inventories

This option is correct because it includes all liquid assets, except for inventories.

• D. Current Assets less Inventories and Prepaid Expenses

This option is incorrect because it includes prepaid expenses, which are not liquid assets. Prepaid expenses are assets that have been paid for in advance, but have not yet been used. They are not readily convertible into cash.