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Liquidity Ratios Quiz

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1. What is the primary purpose of using liquidity ratios in financial analysis?

2. Which of the following is a type of liquidity ratio?

3. What does a high Current Ratio indicate?

4. Which of the following statements is correct about the cash ratio?

5. Operating Cash Flow Ratio is a measure of how well current liabilities are covered by the cash flows generated from a company's operations. Which of the following is the correct formula for it?

6. If the liquid assets of a company are not enough to cover its current liabilities, what would be the liquidity risk facing the company?

7. Which of the following factors could influence a company's liquidity ratios?

8. Why might a company have a very high cash ratio?

9. What does a low acid-test ratio typically indicate?

10. Which of the following statements is true about the net working capital ratio?