[amp_mcq option1=”$$\\frac{{{\\text{Total Assets}}}}{{{\\text{Total Liabilities}}}}$$” option2=”$$\\frac{{{\\text{Current Assets}}}}{{{\\text{Current Liabilities}}}}$$” option3=”$$\\frac{{{\\text{Liquid Assets}}}}{{{\\text{Current Liabilities}}}}$$” option4=”$$\\frac{{{\\text{Current Liabilities}}}}{{{\\text{Liquid Assets}}}}$$” correct=”option3″]<\/p>\n
The correct answer is: C. $\\frac{{{\\text{Liquid Assets}}}}{{{\\text{Current Liabilities}}}}$<\/p>\n
Liquid assets are assets that can be quickly converted into cash. Current liabilities are liabilities that are due within one year. The liquid ratio is a measure of a company’s ability to meet its short-term obligations. A higher liquid ratio indicates that a company is more likely to be able to meet its short-term obligations.<\/p>\n
Option A is incorrect because it calculates the total asset turnover ratio. The total asset turnover ratio is a measure of how efficiently a company uses its assets to generate sales.<\/p>\n
Option B is incorrect because it calculates the current ratio. The current ratio is a measure of a company’s ability to meet its short-term obligations. However, it does not take into account the liquidity of a company’s assets.<\/p>\n
Option D is incorrect because it calculates the inverse of the liquid ratio. The inverse of the liquid ratio is a measure of a company’s long-term solvency.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”$$\\frac{{{\\text{Total Assets}}}}{{{\\text{Total Liabilities}}}}$$” option2=”$$\\frac{{{\\text{Current Assets}}}}{{{\\text{Current Liabilities}}}}$$” option3=”$$\\frac{{{\\text{Liquid Assets}}}}{{{\\text{Current Liabilities}}}}$$” option4=”$$\\frac{{{\\text{Current Liabilities}}}}{{{\\text{Liquid Assets}}}}$$” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-48533","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"\n