Which of the Following Is NOT True of Liquidity Ratios

question 54

Multiple Choice

Which of the following is NOT true of liquidity ratios?

• A) They measure the ability of a firm to meet short-term obligations with short-term assets without putting the firm in financial trouble.
• B) There are two commonly used ratios to measure liquidity-current ratio and quick ratio.
• C) For manufacturing firms, quick ratios will tend to be much larger than current ratios.
• D) The higher the liquidity ratios, the more liquid the firm and the better its ability to pay its short-term bills.

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Definitions:

Somatic Fluid

Bodily fluids that are part of, or produced by, the cells or tissues of the body, excluding reproductive fluids.

Electroencephalograph

An instrument that measures and records the electrical activity of the brain, known as an EEG.

Positron Emission Tomography

A type of imaging test that uses a radioactive substance to look for disease in the body, especially in the brain.

Electrical Stimulation

The use of electrical impulses to induce a muscular contraction or stimulate nerves and tissues for therapeutic purposes.