Technical liquidity is normal evaluated on the basis of the following ratio in a human enterprise:
(A) Current ratio
(B) Quick or Acid-test ratio
(C) Absolute liquid ratio
(D) All of these
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Answer:
current ratio
Explanation:
A good current ratio is between 1.2 to 2, which means that the business has 2 times more current assets than liabilities to covers its debts. A current ratio below 1 means that the company doesn't have enough liquid assets to cover its short-term liabilities.
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