Question

Two basic measures of liquidity are ______.

विकल्प

• Inventory Turnover and Current Ratio

• Current Ratio and Quick Ratio

• Gross Profit Ratio and Operating Ratio

• Current Ratio and Average Collection Period

• Current Ratio and Working Capital Turnover Ratio.

Answer 1

Two basic measures of liquidity are current ratio and quick ratio.

Explanation:

The two primary measures of liquidity are the Current Ratio and the Quick Ratio, which assess a company’s ability to meet its short-term obligations. The Current Ratio compares total current assets to current liabilities, offering a broad view of short-term financial health. The Quick Ratio provides a stricter test of immediate cash liquidity by measuring only the most liquid assets, explicitly excluding inventory and prepaid expenses.