An organization might use a liquidity ratio to:
  1. Estimate the time frame for paying off long-term debt
  2. Determine the ratio of cash and accounts receivable to amounts owed
  3. Estimate the organization’s ability to pay off short-term debt
  4. Calculate operating costs for a new program project
Explanation
Answer: C - An organization might use a liquidity ratio to estimate their ability to pay off short-term debt. The liquidity ratio is calculated by dividing liquid assets by total assets.
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