Question

The ability of a business to pay obligations that are expected to become due within the next year or operating cycle is

Answer 1

Answer: liquidity of the business

 

Explanation: Financial liquidity relates to how simple it is to turn assets into money. Properties such as equities and bonds are rather liquid because within days it can be turned into currency.

Nonetheless, it is not as easy to convert substantial assets such as land, plant, and equipment into currency. Money is a liquid commodity. Nevertheless, some assets like equities and bonds are quickly converted into cash.

Although stocks and bonds can be converted to currency incredibly easily, they are sometimes linked to as liquid assets.