All of the following are used to measure liquidity except:

• A. Debt-to-equity ratio
• B. Current ratio
• C. Cash ratio
• D. Quick ratio

Answer: (A)

Verified step by step guidance

1. Understand the concept of liquidity: Liquidity refers to a company's ability to meet its short-term obligations using its most liquid assets. Ratios that measure liquidity focus on current assets and liabilities.
2. Review the provided options: Current ratio, Cash ratio, Quick ratio, and Debt-to-equity ratio. Identify which of these ratios are commonly used to measure liquidity.
3. Define each ratio: The Current ratio, Cash ratio, and Quick ratio are all liquidity ratios that assess a company's ability to pay short-term liabilities. The Debt-to-equity ratio, however, measures financial leverage and is not a liquidity ratio.
4. Explain why Debt-to-equity ratio is not a liquidity measure: The Debt-to-equity ratio evaluates the proportion of debt financing relative to equity financing, focusing on long-term financial structure rather than short-term liquidity.
5. Conclude that the correct answer is Debt-to-equity ratio, as it does not measure liquidity, unlike the other options provided.