A common measure of liquidity isA) the asset turnover ratioB) dividends per share of common stockC) the accounts receivable turnoverD) the profit margin

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Stein Meinders · Accepted Answer

Final Answer : C, Explanation :  The accounts receivable turnover is a common measure of liquidity, as it indicates how quickly a company is able to collect payment for its credit sales. A higher turnover ratio indicates that a company is able to quickly convert its accounts receivable into cash, which is a sign of good liquidity. The other three options listed are measures of profitability or efficiency, not liquidity.

A common measure of liquidity is

A) the asset turnover ratio
B) dividends per share of common stock
C) the accounts receivable turnover
D) the profit margin

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