A Liquidity Ratio Measures the

question 54

Multiple Choice

A liquidity ratio measures the

• A)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:

ROI Calculations

The process of determining the return on investment by dividing the net profit by the initial cost of the investment.

Margin

The difference between the selling price of a good or service and the cost of producing it, often expressed as a percentage of the selling price.

Return on Investment

A measure of the profitability of an investment, calculated as a percentage of the return relative to the investment's cost.

Investment Opportunity

A potential financial venture or asset purchase that could yield returns in the future.