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Home Questions 72APY2HXFN
Target Exam

CUET

Subject

-- Accountancy Part B

Chapter

Accounting Ratios

Question:

The two basic measures of liquidity are:

Options:

Inventory turnover and current ratio

Liquid ratio, trade receivable

Current ratio and liquid ratio

Current ratio and average collection period

Correct Answer:

Current ratio and liquid ratio

Explanation:

The correct answer is Option 3: Current ratio and liquid ratio

Liquidity refers to a firm's ability to meet its short-term obligations (liabilities maturing within one year) as they fall due. The two primary ratios used to measure this are:Current ratio and liquid ratio.

 

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