Which of the Following Statements About Liquidity Ratios Is True

question 28

Multiple Choice

Which of the following statements about liquidity ratios is true?

• A)The higher the current ratio,the more likely a firm is able to pay its short-term obligations
• B)The lower the quick ratio relative to the current ratio,the safer a firm is in terms of liquidity
• C)The lower the current ratio,the more likely a firm is able to pay its short-term obligations
• D)Relatively high current ratios are usually a sign of efficient working capital management

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Definitions:

Antidiuretic Hormone

A hormone that helps to control the balance of water in the body by reducing the amount of water excreted by the kidneys.

Distal Tubule

Part of the nephron in the kidney responsible for the reabsorption of ions, water, and nutrients.

Ascending Limb

A segment of the loop of Henle in the kidney, involved in the reabsorption of water and solutes during urine formation.

Vertebrate Body

The physical structure of animals with backbones, characterized by a segmented spinal column and a complex skeletal structure.