Which of the Following Is True of the Liquidity Ratio

Multiple Choice

Which of the following is true of the liquidity ratio?

A) It indicates how easily an organization's assets are converted into cash.
B) It reflects an organization's ability to meet long-term financial obligations.
C) It shows managers and investors how much return an organization is generating relative to its assets.
D) It helps estimate an organization's ability to cover interest expenses on borrowed capital.
E) It indicates the effectiveness of specific functional areas in an organization.