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ABC produces accounts to the year ended 31 December annually Extracts from the most recent financial statements are.
Which of the following ratios is a liquidity ratio?
Suggested Answer: D
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37 comments · newest first
AN
Angelica
11 months ago
Totally agree with D, it's straightforward!
NE
Nenita
11 months ago
Really? I always get confused with these ratios.
HO
Hoa
11 months ago
Current assets/current liabilities is the classic liquidity ratio.
AN
Anglea
12 months ago
I thought A was a liquidity ratio?
IS
Isadora
12 months ago
D is definitely the liquidity ratio!
DA
Daniel
1 year ago
I’m a bit confused; I thought Operating profit ratios were also important, but they don’t seem to fit the liquidity category.
EL
Elmira
1 year ago
I’m not entirely confident, but I feel like Current assets over Current liabilities is definitely a liquidity ratio.
ST
Stefania
1 year ago
I remember practicing similar questions, and I’m pretty sure that Debt/Equity is more about leverage than liquidity.
VI
Vincenza
1 year ago
I think liquidity ratios measure a company's ability to cover short-term obligations, so I’m leaning towards option D.
EL
Elizabeth
1 year ago
I'm a little lost on this one. I know liquidity ratios measure a company's short-term financial health, but I'm having trouble remembering the specific formulas. Maybe I'll try to eliminate the options that clearly aren't liquidity ratios and then make an educated guess.
CH
Charlie
1 year ago
Hmm, I'm a bit unsure about this one. I know liquidity ratios have to do with a company's ability to pay its short-term obligations, but I'm not totally confident in my ability to identify them. I'll have to think this through carefully.
TI
Tiara
1 year ago
This looks like a straightforward financial ratio question. I'll start by identifying the liquidity ratios I know, like current ratio and quick ratio, and see if any of the options match those.
PA
Pamella
1 year ago
Okay, I've got this. The current ratio, which is current assets divided by current liabilities, is a classic liquidity ratio. That matches option D, so I'm going with that.
SU
Sue
1 year ago
Okay, I think I've got this. If we apply rule sets rather than individual context rules, that would be the true answer. Let me double-check my understanding before selecting the final answer.
CL
Clare
1 year ago
I practiced with a few similar exam questions, and "cloud-mis qos" was an option before. I don't think that's it here, though.
TI
Timothy
2 years ago
D) Current assets/Current liabilities is the only one that doesn't sound like a joke. I mean, who would use 'Debt/Equity' as a liquidity ratio?
KI
Kimberlie
2 years ago
Definitely, 'Debt/Equity' sounds more like a leverage ratio.
KI
Kimberlie
2 years ago
I think 'Current assets/Current liabilities' is the correct liquidity ratio.
KI
Kimberlie
2 years ago
I agree, 'Debt/Equity' doesn't seem like a liquidity ratio.
LI
Ling
2 years ago
I agree, because it measures the company's ability to meet short-term obligations.
AD
Adaline
2 years ago
I'd go with D, can't go wrong with the old current ratio. The other options are just too random to be liquidity ratios.
NI
Nicolette
2 years ago
It's always good to stick with the basics when it comes to analyzing financial statements.
RO
Romana
2 years ago
Definitely, the current ratio is a key indicator of a company's liquidity position.
MA
Marg
2 years ago
Yeah, D is a classic ratio that measures a company's ability to cover its short-term liabilities with its short-term assets.
EL
Elin
2 years ago
I agree, D is the most straightforward choice for a liquidity ratio.
LA
Lai
2 years ago
I believe the correct answer is D) Current assets/Current liabilities.
LI
Ling
2 years ago
Yes, it is asking which ratio is a liquidity ratio.
HO
Honey
2 years ago
Gotta be D, the current ratio is a classic liquidity measure. The others are more profitability or efficiency ratios.
PA
Pauline
2 years ago
Yes, D is the current ratio which shows how easily a company can cover its short-term debts.
KA
Kaycee
2 years ago
I agree, D is the correct answer. It measures the company's ability to pay off its short-term liabilities.
LA
Lai
2 years ago
I think the question is about liquidity ratios.
MI
Miesha
2 years ago
D) Current assets/Current liabilities seems like the liquidity ratio to me. The others don't really fit the definition of a liquidity ratio.
RU
Ruthann
2 years ago
D) Current assets/Current liabilities seems like the liquidity ratio to me. The others don't really fit the definition of a liquidity ratio.
KA
Kattie
2 years ago
D) Current assets/Current liabilities
RE
Reid
2 years ago
C) Revenue/Capital employed
YU
Yun
2 years ago
B) Operating profit/Capital employed x 100%
LI
Lino
2 years ago
A) Debt/Equity x 100%