Which of the Following Is Generally True Regarding Liquidity as It

question 314

Multiple Choice

Which of the following is generally true regarding liquidity as it relates to the firm?

• A) Liquidity is detrimental to a firm because it allows the firm to pay its bills more easily, thereby avoiding financial distress.
• B) Liquidity is valuable to a firm because liquid assets can be sold quickly without much loss in value.
• C) Liquidity is valuable to a firm because a firm can borrow money using its liquid assets, such as a warehouse, as collateral.
• D) Assets are generally listed on a firm's statement of financial position in the order of increasing liquidity.
• E) Liquid assets generally earn a large return, especially in comparison to illiquid assets.