What does liquidity ratio measure?

  • A measures operating efficiency of a company
  • B measures the ability of a company to meet its current obligations.
  • C measures the value of investments of a company
  • D measures the financial leverage of a company
jamb 2015accounting

The correct answer is B. measures the ability of a company to meet its current obligations.

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.

Previous question Next question