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Which of the following is NOT a liquidity ratio?

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Question: Which of the following is NOT a liquidity ratio?

Options:

  1. Current Ratio
  2. Quick Ratio
  3. Debt to Equity Ratio
  4. Cash Ratio

Correct Answer: Debt to Equity Ratio

Solution: 

The Debt to Equity Ratio is not a liquidity ratio; it measures the company\'s financial leverage instead.

Which of the following is NOT a liquidity ratio?

Practice Questions

Q1
Which of the following is NOT a liquidity ratio?
  1. Current Ratio
  2. Quick Ratio
  3. Debt to Equity Ratio
  4. Cash Ratio

Questions & Step-by-Step Solutions

Which of the following is NOT a liquidity ratio?
  • Step 1: Understand what a liquidity ratio is. Liquidity ratios measure a company's ability to pay off its short-term debts.
  • Step 2: Identify common liquidity ratios. Examples include the Current Ratio and Quick Ratio.
  • Step 3: Look at the options given in the question. Find the one that does not measure liquidity.
  • Step 4: Recognize that the Debt to Equity Ratio measures financial leverage, not liquidity.
  • Step 5: Conclude that the Debt to Equity Ratio is NOT a liquidity ratio.
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