Liquidity Ratios Measure the Ability of an Entity To

question 11

Multiple Choice

Liquidity ratios measure the ability of an entity to:

• A) remain a going concern.
• B) meet its short-term obligations and unexpected cash needs.
• C) generate profit.
• D) all of the options are correct.

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Definitions:

Administrative Cost

Refers to expenses related to the general operation of a business, including office supplies, management salaries, and other non-production related costs.

Equilibrium Pricing

The point at which the supply of a product matches demand, setting the market price.

Deadweight Loss

A loss in economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable.

Imposition

The act of establishing or applying something by authority or force, often referring to taxes, duties, or policies.