A Liquidity Ratio Measures the

question 71

Multiple Choice

A liquidity ratio measures the

• A) net income or operating success of a company over a period of time.
• B) ability of a company to survive over a long period of time.
• C) short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash.
• D) percentage of total financing provided by creditors.

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Definitions:

Market Price

The price level at which a service or asset is being offered for sale or purchase in the market now.

Ex-dividend Date

The specific date on which a stock trades without its dividend, meaning that if you purchase the stock on or after this date, you will not receive the next dividend payment.

Date Of Record

Date on which holders of record are designated to receive a dividend.

Excess Cash

The amount of cash holdings that exceeds what a business requires for its immediate operational needs.