Which of the Following Ratios Is Used to Estimate the Liquidity

question 76

Multiple Choice

Which of the following ratios is used to estimate the liquidity of a business?

• A) Inventory turnover ratio
• B) Total assets to total liabilities ratio
• C) Current ratio
• D) Quick ratio

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Definitions:

Pay Period

The regular schedule by which employers pay wages to employees, such as weekly, biweekly, or monthly.

Social Security Taxes

Taxes levied on both employees and employers to fund the Social Security program, providing retirement, disability, and survivor benefits.

Wages

are payments made to employees for their services, typically calculated on an hourly, daily, or piecework basis.

Withholding Allowances

Claims made by employees on their W-4 form to reduce the amount of federal income tax withheld from their paychecks.