Which of the Following Statements About Liquidity Is True

question 391

Multiple Choice

Which of the following statements about liquidity is true?

• A) If a firm has a high degree of liquidity, it also faces a high degree of financial distress.
• B) At times, too little liquidity can result in lower profits for a firm since there is often a trade- off between liquidity and profitability.
• C) You can get an accurate picture of the liquidity of a firm by looking at its current assets.
• D) Accounts receivable are generally considered to be more liquid than cash.
• E) An asset is liquid if it can be sold quickly regardless of price.

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Definitions:

Standard Errors

A statistical term that describes the estimated standard deviation of a sampling distribution of a statistic, often used in hypothesis testing.

Sample Means

The average value derived from a subset of a larger population, used as an estimate of the overall population mean in statistical analysis.

Subjective Sampling

A sampling technique where the samples are selected based on the judgment of the researcher, rather than using random selection methods.

Judgment Sampling

A non-probability sampling technique where the researcher selects units to be sampled based on their knowledge and professional judgment.