Which of the following best describes how to assess a borrower's liquidity risk in treasury management?

• A. Review liquidity ratios, cash conversion cycle, availability of credit facilities, and stress-testing for cash flow gaps; ensure sufficient liquidity for debt service.
• B. Monitor only the debt-to-equity ratio and interest coverage ratio.
• C. Rely solely on collateral value to ensure liquidity.
• D. Assume liquidity is adequate if profits are positive.

Answer: (A)