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Which of the following is not a ratio to assess a firm's liquidity?a. Current Ratiob. Debt ratioc. Quick Ratiod. All of the above assess liquidity.

User Afinas EM
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7 votes

Answer:

b. Debt ratio

Step-by-step explanation:

The liquidity ratio includes the current ratio, quick ratio, etc

where,

Current ratio = Total Current assets ÷ total current liabilities

And, Quick ratio = Quick assets ÷ total current liabilities

where,

Quick assets = Cash and cash equivalents + short-term investments + Accounts receivable (net)

These two ratios check the liquidity of the business organization whereas debt ratio shows a relationship between the total liabilities and the total assets. It checks the leverage of the firm whether it is capable to repay the borrowed amount or not

Hence, option b is correct

User Steven Carlson
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