Liquidity Ratios

State the following statement is True or False.

Ratios help in comparisons of a firm’s results over a number of accounting periods as well as with other business enterprises.

• True

• False

State the following statement is True or False.

A ratio reflects quantitative and qualitative aspects of results.

• True

• False

The _________ of business firm is measured by its ability to satisfy its short term obligations as they become due:

• Activity

• Liquidity

• profitability

• Solvency

The two basic measures of liquidity are:

• inventory turnover and current ratio

• current ratio and liquid ratio

• gross profit Ratio and operating ratio

• current ratio and average collection period

The _________ is a measure of liquidity which excludes _______, generally the least liquid asset:

• Current ratio, trade receivable

• Liquid ratio, trade receivable

• Current ratio, inventory

• Liquid ratio, inventory