CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Which of the following is not a measure of liquidity?
A. Free cash flow
B. Operating income
C. Operating cycle
Explanation: Free cash flow is the excess of operating cash flow over basic needs.

User Contributed Comments 9

User Comment
Gina EBIT - because it measures profitability
SDog Free cash flow takes into account investment needs, which are long term cash flows.
gene80 think becos operating income is not indicative of liquidity becos of the fact tt it does not reflect CAs vs CLs. It's off balance sheet.
CoffeeGirl operating income , not a measure for liquidity
danrow What is operating cycle?
dlukas Operating cycle = no. days inventory + no. days receivables. It's a measure of working capital management.

Make flash cards and learn your ratios.
shiva5555 How is the operating cycle a measure of liquidity? Isn't it a measure of efficiency.
maria15 dlukas: Isn't operating cycle = no. of days inventory+ no. of days receivables - no. of days payables?
tushi123 operating cycle or cash conversion cycle is a measure of liquidity.
cash flow is also a crucial item in measuring current ration, quick ration etc. operating income is not a measure of liquidity because it considers non cash items too
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