CIPS L4M4 Exam - Topic 3 Question 39 Discussion

Actual exam question for CIPS's L4M4 exam

Question #: 39
Topic #: 3

[All L4M4 Questions]

Liquidity is a solvency measure which determines whether an organisation is able to pay its debt. Which of the following would you use to assess a supplier's liquidity? Select TWO.

Acurrent assets

Bcurrent liabilities

Clong-term debt

Dshareholder's equity

Show Suggested Answer

Suggested Answer: A, B

The correct answer is current assets and current liabilities. There are many Questions about financial ratios on the exam.

If you're unsure on them I suggest doing further reading outside of the study guide as this will help. I like this youtube video (I'm not associated with the makers of this video but think it's a great way to explain liquidity) Liquidity ratios (youtube.com)

You can be asked to work out liquidity in the exam. If you are asked this, the numbers will be very simple to the point you may be able to do the sums in your head. There is also a calculator on the test app you can use.

by Wenona at Aug 14, 2025, 02:10 PM

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Jamal

2 months ago

Current assets and current liabilities are the right choices!

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Catalina

2 months ago

Not sure about that, I thought shareholder's equity mattered too.

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Florinda

2 months ago

I agree, current assets and current liabilities are key.

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Theresia

3 months ago

Wait, long-term debt isn't a liquidity measure? That's surprising!

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Corazon

3 months ago

Definitely A and B for liquidity assessment!

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Malinda

3 months ago

I think current liabilities are definitely one of the answers, but I'm a bit confused about the second option. Could it be current assets?

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Dusti

4 months ago

I feel like we discussed how current assets and current liabilities are key indicators for liquidity. I hope I remember that correctly!

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Brinda

4 months ago

I'm not entirely sure, but I remember something about long-term debt not being directly related to liquidity. Maybe it's just current assets and liabilities?

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Lyda

4 months ago

I think we need to look at current assets and current liabilities to assess liquidity, right? That sounds familiar from our practice questions.

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Naomi

4 months ago

Wait, I'm a bit confused. Isn't long-term debt also important for assessing liquidity? I'll have to think this through carefully.

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Chana

4 months ago

Okay, I've got this. Liquidity is all about being able to pay short-term debts, so current assets and current liabilities are the key metrics to look at.

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Lelia

4 months ago

Hmm, I'm not totally sure about this one. I think current assets and current liabilities are the right choices, but I'll double-check my notes just to be sure.

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