Which of the following ratios gives an idea of the liquidity of a firm?

  • A Turnover ratio
  • B Quick ratio
  • C Debit ratio
  • D Dividend yield
jamb 1995accounting

The correct answer is B. Quick ratio

The Quick ratio, also known as the acid-test ratio, gives an idea of the liquidity of a firm.

It measures a company's ability to meet its short-term obligations with its most liquid assets.

Quick ratio excludes inventories from current assets, as they may not be easily convertible to cash.

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