Which of the following is not a measure of a company's liquidity? a. accounts receivable turnover b. return on equity c. quick ratio d. cash flow ratio e. day's sales in inventory | Homework.Study.com (2024)

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Which of the following is not a measure of a company's liquidity? a. accounts receivable turnover b. return on equity c. quick ratio d. cash flow ratio e. day's sales in inventory | Homework.Study.com? ›

b. return on equity is not a measure of a company's liquidity. Return on equity is the net income divided by the total equity. It is a profitability ratio, not a liquidity ratio because it represents the net income earned for each dollar of stockholders' equity.

Debt to assets ratio. This is not a liquidity ratio but a solvency ratio. It is computed by dividing the total liabilities by total assets indicating the level of assets financed by the debt. All the other options including current ratio and working capital measure the liquidity of a firm.

Answer and Explanation:

The debt-to-equity ratio is not a liquidity ratio. It is a solvency ratio that measures a company's financial leverage by comparing its total liabilities to its shareholders' equity.

The two main types of liquidity are market liquidity and accounting liquidity. Current, quick, and cash ratios are most commonly used to measure liquidity.

The ratio that is not considered to be a liquidity ratio is the debt to equity ratio. A liquidity ratio measures a company's ability to meet its short-term obligations. The most common liquidity ratios are the current ratio, receivable turnover ratio, and inventory turnover ratio.

Liquidity ratios are an important class of financial metrics used to determine a debtor's ability to pay off current debt obligations without raising external capital. Common liquidity ratios include the quick ratio, current ratio, and days sales outstanding.

The current ratio (also known as working capital ratio) measures the liquidity of a company and is calculated by dividing its current assets by its current liabilities. The term current refers to short-term assets or liabilities that are consumed (assets) and paid off (liabilities) is less than one year.

Current ratio is a measure of a company's liquidity, or its ability to pay its short-term obligations using its current assets. It's also a useful ratio for keeping tabs on an organization's overall financial health.

The cash ratio is a measurement of a company's liquidity. It specifically calculates the ratio of a company's total cash and cash equivalents to its current liabilities. The metric evaluates company's ability to repay its short-term debt with cash or near-cash resources, such as easily marketable securities.

Which of the following is a measure of liquidity? Rationale: The only measure of liquidity listed above is Quick Ratio which is simply a variation of the Current Ratio (Current ratio = Current assets / Current liabilities) to focus on quick assets (cash, securities, and receivables).

What are two measures of liquidity? ›

The two measures of liquidity are: Market Liquidity. Accounting Liquidity.

The most common examples of non-liquid assets are equipment, real estate, vehicles, art, and collectibles. Ownership in non-publicly traded businesses could also be considered non-liquid. With these kinds of assets, the time to cash conversion is difficult to predict.

The quick ratio typically excludes prepaid expenses and inventory from liquid assets. Prepaid expenses aren't included because the cash can't be used to pay off other liabilities. On the other hand, inventory is often considered a fairly liquid asset.

The payback method is a measure of liquidity and not a measure of profitability. This method calculates the time it will take for an investment to generate enough cash flows to recover the initial investment.

Answer and Explanation:

Both the c) quick ratio and d) current ratio are liquidity ratios. The current ratio simply divides current assets by current liabilities to see how many times the current assets can pay the current liabilities. The quick ratio is more conservative and excludes inventory for its calculation.

Which of the following is a measure of liquidity? Rationale: The only measure of liquidity listed above is Quick Ratio which is simply a variation of the Current Ratio (Current ratio = Current assets / Current liabilities) to focus on quick assets (cash, securities, and receivables).

A liquidity ratio is a measurement that shows how much cash an organization has available to pay bills and debts.