Which of the Following Statements Is Incorrect

question 63

Multiple Choice

Which of the following statements is incorrect?

• A)It is possible for a profitable company to go out of business because of short-term liquidity problems.
• B)If a company has a current ratio greater than 1, it will never go out of business because of liquidity problems.
• C)The current ratio is always greater than or equal to the quick ratio.
• D)The accuracy of a cash flow forecast is inversely related to the forecast horizon.

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Definitions:

Settlement

The process of transferring ownership of securities from the seller to the buyer and the corresponding payment from the buyer to the seller.

Accrued Interest

Interest that has been incurred but not yet paid, often considered in bond pricing and transactions.

Financial Press

Media outlets that provide news, analysis, and commentary on financial and economic subjects, including markets and business trends.

Bond Price

The market value of a bond, which fluctuates based on interest rates, credit quality, and the bond's time to maturity.