This financial ratio measures the business's liquidity:
A. profit margin.
B. average daily rate ratio.
C. current ratio.
D. days receivable ratio.
C.
If anyone here knew the answer, s/he would have posted it. Please do not post this question again today.
I agree with your answer of C. By looking up financial ratios, I saw current ratios for liquidity.
I hope this helps! :)
All I wanted to know if my answer was right. I'm sorry if I upset you.
Thank you Brady it surely helps :-)
You're welcome, Amanda. :)
P.S. I didn't see any of the other options talked about with liquidity, so that also made me think C.
To determine the financial ratio that measures a business's liquidity, you can start by understanding what liquidity means. Liquidity refers to a company's ability to meet its short-term obligations and convert its assets into cash quickly. There are several ratios used to assess liquidity, but the one mentioned in the question is the current ratio.
To calculate the current ratio, you need two figures from the company's financial statements: current assets and current liabilities. Current assets include items such as cash, accounts receivable, inventory, and short-term investments. Current liabilities include accounts payable, short-term loans, and accrued expenses.
Once you have these figures, you can compute the current ratio by dividing current assets by current liabilities. For example, if a company has $100,000 in current assets and $50,000 in current liabilities, the current ratio would be 2:1.
In the given options, the correct answer is C. current ratio. This is because the current ratio specifically measures a company's ability to cover its short-term obligations with its short-term assets. The higher the current ratio, the better the company's liquidity position, as it indicates a greater ability to meet its current liabilities.