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4 April, 18:35

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.

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  1. 4 April, 18:58
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    b. Debt ratio

    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
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