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
Correct Answer: Option B
Explanation
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.