CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Liquidity refers to a firm's short-term ability to generate cash for working capital needs and immediate debt repayment needs. True or False?
Correct Answer: True

This is the definition of liquidity. Solvency refers to a firm's ability to generate a stream of cash flows sufficient to maintain its productive capacity and still meet principal and interest payments on debt in the long run.

User Contributed Comments 1

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viviann Liquidity refers to a firm's short-term ability to generate cash for working capital needs and immediate debt repayment needs; Solvency refers to a firm's ability to generate a stream of cash flows sufficient to maintain its productive capacity and still meet principal and interest payments on debt in the long run.
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