A Liquidity Ratio Measures the

question 70

Multiple Choice

A liquidity ratio measures the

• A) number of times interest is earned.
• B) short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash.
• C) ability of the company to survive over a long period of time.
• D) earnings or operating success of a company over a period of time.

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Definitions:

Free Cash Flow

A measure of financial performance calculated as operating cash flow minus capital expenditures, reflecting the amount of cash a company can generate after maintaining or expanding its asset base.

Operating Cash Flow

Cash generated from a company's normal business operations.

Financial Ratios

Quantitative measures derived from financial statements used to assess a company's performance, financial health, and valuation.

Industry

A sector of the economy that produces a closely related set of raw materials, goods, or services.