Asked by Dinesh Sivanesan on Jun 19, 2024
Verified
Which of the following measures how readily assets can be converted to cash relative to how soon liabilities will have to be paid in cash?
A) capital structure.
B) maturity structure.
C) solvency.
D) liquidity.
Liquidity
The simplicity of turning an asset into cash without impacting its market value.
- Examine the measures of financial flexibility and liquidity and their indication of a firm's capacity to fulfill its financial commitments and seize investment opportunities.
Verified Answer
RG
Rudali GoveiaJun 19, 2024
Final Answer :
D
Explanation :
Liquidity measures how easily an asset can be converted to cash, and how soon liabilities will have to be paid in cash. Capital structure refers to the mix of debt and equity financing used by a company. Maturity structure refers to the timing of when a company's liabilities will be due for payment. Solvency measures a company's ability to pay its debts in the long term.
Learning Objectives
- Examine the measures of financial flexibility and liquidity and their indication of a firm's capacity to fulfill its financial commitments and seize investment opportunities.