[amp_mcq option1=”Pure ratio form” option2=”Percentage” option3=”Rate or time” option4=”None of the above” correct=”option1″]<\/p>\n
The correct answer is: A. Pure ratio form.<\/p>\n
Liquidity ratios are financial metrics that measure a company’s ability to meet its short-term obligations. They are expressed as a pure ratio, which means that they do not include any units of measurement. This makes them easy to compare across different companies and industries.<\/p>\n
The most common liquidity ratios are the current ratio and the quick ratio. The current ratio is calculated by dividing a company’s current assets by its current liabilities. The quick ratio is calculated by dividing a company’s cash and cash equivalents, short-term investments, and accounts receivable by its current liabilities.<\/p>\n
Liquidity ratios are important because they can help investors and creditors assess a company’s financial health. A high current ratio or quick ratio indicates that a company is able to meet its short-term obligations. A low current ratio or quick ratio, on the other hand, indicates that a company may have difficulty meeting its short-term obligations.<\/p>\n
Here is a brief explanation of each option:<\/p>\n
[amp_mcq option1=”Pure ratio form” option2=”Percentage” option3=”Rate or time” option4=”None of the above” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[952],"tags":[],"class_list":["post-49985","post","type-post","status-publish","format-standard","hentry","category-costing","no-featured-image-padding"],"yoast_head":"\n