Final answer:
Working capital is not a liquidity measure; it is the difference between a company's current assets and liabilities. The cash ratio, current ratio, and acid-test ratio, however, are measures of liquidity.
Step-by-step explanation:
The measure among the options that is not considered a measure of an entity's liquidity is working capital. Liquidity refers to how quickly and easily an asset can be converted into cash without significant loss of value. While the cash ratio, current ratio, and acid-test ratio are all financial metrics used to evaluate a company's short-term liquidity and ability to pay off its obligations, working capital is the difference between a company's current assets and current liabilities, which represents the company's efficiency and short-term financial health but does not directly indicate liquid assets.
- Cash ratio measures the extent to which a company can cover its short-term liabilities with its most liquid assets (cash and cash equivalents).
- The current ratio compares all of a company's current assets to its current liabilities, providing a broad measure of liquidity.
- The acid-test ratio (also known as the quick ratio) measures a company's ability to pay its current liabilities without relying on the sale of inventory.