What does liquidity ratio measure?

Accounts - Principles of Accounts JAMB 2015

What does liquidity ratio measure?

  • measures operating efficiency of a company
  • measures the ability of a company to meet its current obligations. checkmark
  • measures the value of investments of a company
  • measures the financial leverage of a company

The correct answer is: B

Explanation

liquidity ratio attempt to measure the ability to meet up with current obligations e.g. current ratio which measures the current asset to current liabilities.
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