Which of the Following Is an Example of Liquidity Analysis

question 35

Multiple Choice

Which of the following is an example of liquidity analysis?

• A)Total liabilities are divided by total assets.
• B)Net income is divided by average total assets.
• C)Net income is divided by the average number of common shares outstanding.
• D)Quick assets are divided by current liabilities.

---

Definitions:

Variable Expenses

Expenditures that fluctuate in tandem with operational activity levels, including costs like utilities and commissions.

Net Income

The total profit of a company after all expenses, including taxes and operating expenses, are subtracted from total revenue.

Break-Even Point

The point at which the amount produced or sold results in total income matching total costs, leading to neither a profit nor a loss.

Net Loss

The amount by which expenses exceed revenues over a specific period, indicating a negative financial performance.