Which of the Following Statements About Liquidity Is True

Multiple Choice

Which of the following statements about liquidity is true?

A) If a firm has a high degree of liquidity, it also faces a high degree of financial distress.
B) At times, too little liquidity can result in lower profits for a firm since there is often a trade- off between liquidity and profitability.
C) You can get an accurate picture of the liquidity of a firm by looking at its current assets.
D) Accounts receivable are generally considered to be more liquid than cash.
E) An asset is liquid if it can be sold quickly regardless of price.