Which Ratio Measures the Ability of an Organization to Convert

question 119

Multiple Choice

Which ratio measures the ability of an organization to convert assets into the cash it needs to pay off liabilities that come due in the next year?

• A) liquidity
• B) asset management
• C) leverage
• D) profitability

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Definitions:

Taxable

Pertaining to income or transactions that are subject to tax by the relevant tax authority.

Municipal Bonds

Municipal Bonds are debt securities issued by municipalities to finance public projects, often offering tax-exempt interest payments to the investors.

Seller-Financed Mortgage

A real estate purchase financing method where the seller extends credit to the buyer to purchase the property.

Interest Received

The amount earned from interest-bearing accounts or investments, such as savings accounts or bonds, which is usually taxable income.