Which of the following ratios gives an idea of the liquidity of a firm?

Assessment: JAMB UTME - Principles of Accounts - 1995 Subject: Financial Accounting

Question 1 Report

Which of the following ratios gives an idea of the liquidity of a firm?
Answer Details
The ratio that gives an idea of the liquidity of a firm is the Quick ratio. The quick ratio, also known as the acid-test ratio, measures a company's ability to pay off its current liabilities with its quick assets, which are assets that can be easily converted to cash. Quick ratio provides a more conservative measure of liquidity compared to other liquidity ratios like the current ratio, which includes all current assets. A higher quick ratio indicates that a company has enough quick assets to cover its current liabilities and can quickly pay off its obligations. Therefore, option B (Quick ratio) is the correct answer.
Read lesson note on Nature And Significance Of Accounting (JAMB)
View Answer

Related Questions

1

The factory cost of producing goods is made up of
2

A charitable club has the following figures: N Subscriptions received in 1991 2 800 Subscriptions unpaid in 1990 300 Subscriptions paid for 1992 150 Subscrip...
3

An effective accounting system should provide information
4

which of the following factors has aided the development of accounting?
5

Interest on a partner's drawings is debited to the
6

MACHINERY Historical cost ₦6 000 000.00 Estimated useful life 20 years Residual value ₦25 000.00 Date of acquisition 1/1/71 Depreciation method Straight line...
7

Which of the following concept stipulates that accounting profit is the difference between revenue and expenses?
8

THE BOOK VALUE OF THE ASSET AS AT 31/12/86 WAS

Download The App On Google Playstore

Everything you need to excel in your exams

Green Bridge CBT Mobile App
Personalized AI Learning Chat Assistant
200,000+ Exam Questions Across IGCSE, JAMB, WAEC & NECO
Over 3,900 Lesson Notes
Offline Support - Learn Anytime, Anywhere
Green Bridge Timetable
Literature Summaries & Potential Questions
Track Your Performance & Progress
In-depth Explanations for Comprehensive Learning