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easyMCQCUET Accountancy2026Accountancy
1 mark

The two basic measures of liquidity are:

  1. A
    Inventory turnover and current ratio
  2. B
    Liquid ratio, trade receivable
  3. C
    Current ratio and liquid ratio
  4. D
    Current ratio and average collection period

Solution & Step-by-step Explanation

Liquidity ratios measure a company's ability to meet its short-term financial obligations. The two standard and primary ratios used for this purpose are the Current Ratio (Current Assets / Current Liabilities) and the Liquid Ratio (also known as the Quick Ratio or Acid Test Ratio).

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The two basic measures of liquidity are:
A
Inventory turnover and current ratio
B
Liquid ratio, trade receivable
C
Current ratio and liquid ratio
D
Current ratio and average collection period

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Financial StatementsRatiosLiquidity Ratios

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