Which of the Following Is False

question 43

Multiple Choice

Which of the following is false?

• A)The major difference between the quick and current ratios is inventory.
• B)Current liabilities are the denominator in the cash,quick,and current ratios.
• C)Companies that sell expensive merchandise tend to have high inventory turnover ratios.
• D)Some analysts do not use the cash ratio because it is very sensitive to individual events.

---

Definitions:

Limited Liability

A legal structure that limits the extent of financial liability for investors to the amount invested in a company.

Incorporation

The legal process of forming a corporation, which is a type of business entity recognized as separate from its owners.

Shareholder

An individual or entity that owns shares in a corporation, making them a part owner of the company.

Finance

The study and management of money, investments, and other financial instruments, including the processes of raising, allocating, and utilizing funds by individuals, businesses, and governments.