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Liquidity refers to: A. A company’s cash availability B. A company’s ability to general sales from use of its assets C. A company’s operating cycle D. A company’s amount of financial leverage E. A company’s ability to meet its debt obligations

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andromache andromache

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Answer:

E. A company’s ability to meet its debt obligations

Explanation:

Liquidity refers to the items which are be converted into the cash within one year or we can say the cash availability which is to be used for paying the short term obligations or debt obligations i.e current liabilities

There are two liquid ratios i.e current ratio and the quick ratio which checks the liquidity of the company whether the company is capable to pay its short term debt or not

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