Question 9 of 47beginner🧠 RememberMCQ1 mark

The two basic measures of liquidity are:

Exercise: Test your Understanding – II | Q: (v) | (Page 21)
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Explanation

Option B is correct because the textbook explicitly states in section 5.6 that 'The two ratios included in this category are current ratio and liquidity ratio.' Additionally, under 'Types of Ratios', it mentions that 'The liquidity ratios include current ratio and acid test ratio' (acid test ratio is another name for liquid ratio). Options A, C, and D are incorrect because inventory turnover and average collection period are activity ratios, while gross profit margin and operating ratio are profitability ratios—not liquidity ratios.