All of the Following Regarding the Current Ratio Are True

question 64

Multiple Choice

All of the following regarding the current ratio are true except:

• A)Current ratio is calculated by dividing current assets by current liabilities.
• B)Current ratio helps to assess a company's ability to pay its debts in the near future.
• C)Current ratio does not affect a creditor's decision on whether to allow a company to buy on credit.
• D)Current ratio can affect a creditor's decision about whether to lend money to a company.
• E)Current ratio can reveal challenges in covering short-term obligations if it is less than 1.

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Definitions:

Employee Tendency

The general patterns or propensities of behavior and attitudes exhibited by employees in the workplace.

Normative Commitment

An individual's sense of obligation to stay with an organization due to shared values or beliefs.

Perceived Obligation

The belief or feeling that one is duty-bound to perform certain actions.

Regulative Commitment

An individual's adherence to the rules and policies of an organization due to awareness of costs associated with leaving it.