If a Firm's Current Ratio _____, Its Liquidity _____

question 69

Multiple Choice

If a firm's current ratio _____, its liquidity _____.

• A) increases; increases
• B) increases; decreases
• C) decreases; increases
• D) increases; remains the same

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Definitions:

Bond Rating Agencies

Independent firms that assess the creditworthiness of both debt securities and their issuers.

Restrictive Covenants

Clauses in contracts that restrict certain actions of the parties involved to protect business interests.

Default Risk

The likelihood that a borrower will be unable to make required debt payments.

Qualitative Factors

Non-numeric considerations that influence decision-making, such as company reputation, brand strength, or employee morale.