Question

question 18

The ratio of liquid assets to total monthly household expenses is the:

Group of answer choices

Liquidity ratio.

Current ratio.

Operating ratio.

Nondiscretionary cost percentage.

none of the above

Answer 1

Answer: Option (1) Liquidity Ratio

Liquidity ratio indicates the number of months that an individual or family could continue to meet household expenses by tapping cash assets (e.g., if they lost a job or were disabled). It is calculated by dividing cash assets by monthly household expenses.

Other Options Explination:

Current ratio measures whether a firm has enough resources to meet its short-term obligations. It compares a firm's current assets to its current liabilities.

Operating ratio is a company's operating expenses as a percentage of revenue.

Non disceretionary Cost Percentage is the percentage of Non Decretionary Monthly Expenses to total Expenses.

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