Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:14. A(n)
is useful in evaluating liquidity policies.
a. inventory turnover ratio
b. current ratio
c. average collection period
d. Debt ratio
Expert Solution
Step 1
Liquidity refers to the company's ability to determine how quickly it can convert the assets and use them for meeting the dues that arise.it helps to determine whether company can use its current, or liquid, assets to cover its current liabilities.
Current Ratio = Current assets/Current Liabilities
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