Question

Which of the following best describes the current ratio?

Answer 1

Answer:

c. liquidity ratio

Explanation:

Liquidity means having cash or access to cash readily available to meet obligations to make  payments.

For the purpose of ratio analysis, liquidity is measured on the assumption that the only sources of

cash available are:

Cash in hand or in the bank, plus

Current assets that will soon be converted into cash during the normal cycle of trade.

It is also assumed that the only immediate payment obligations faced by the entity are its current  liabilities.

There are two ratios for measuring liquidity:

Current ratio

Quick ratio, also called the acid test ratio.

Based on the above discussion, the answer is c. liquidity ratio

Answer 2

Answer:Your answer would be C liquidy ratio

Hope this helps! :-)

: