In the short run, what distinguishes liquidity from profitability? 1. There are no distinguishable differences. 2. Profitability increases owners\' equity, liquidity does not. 3. Creditors are more interested in profitability than liquidity. 4. Owners have an interest in profitability but not in liquidity. Solution Liquidity: Having enough money in the form of cash, or near-cash assets, to meet your financial obligations. Alternatively, the ease with which assets can be converted into cash. Profitability: A measure of the amount by which a company\'s revenues exceed its relevant expenses. Hence,choice 2. Profitability increases owners\' equity, liquidity does not. .

1. In the short run, what distinguishes liquidity from profitability?
1. There are no distinguishable differences.
2. Profitability increases owners' equity, liquidity does not.
3. Creditors are more interested in profitability than liquidity.
4. Owners have an interest in profitability but not in liquidity.
Solution
Liquidity: Having enough money in the form of cash, or near-cash assets, to meet your financial
obligations. Alternatively, the ease with which assets can be converted into cash.
Profitability: A measure of the amount by which a company's revenues exceed its relevant
expenses.
Hence,choice 2. Profitability increases owners' equity, liquidity does not.