Which of the following is the one measure of liquidity? Select one: A. Debt-to-equity ratio...
Question:
Which of the following is the one measure of liquidity?
Select one:
A. Debt-to-equity ratio
B. Times-interest-earned ratio
C. Quick ratio
D. None of the above
Liquidity:
A company's liquidity position reveals its ability to quickly convert its assets into cash and the available cash-in-hand at the current position. A solid liquidity position helps the company to clear off its debt quickly and maintain a good credit rating.
Answer and Explanation:
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View this answerA. Incorrect. Debt-equity ratio reveals the amount of debt and equity used to finance a company's investment. It is not a measure of liquidity.
B....
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Using Liquidity Ratios & Formulas in Financial Analysis
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Chapter 3 / Lesson 4
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Learn about how liquidity ratios and formulas are used in financial analysis. Paying off a short-term debt by selling assets is liquidity, and a company's liquidity is calculated using three ratios: current, quick, and operating cash.
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