Which of the Following Is True

question 31

Multiple Choice

Which of the following is true?

• A) The motivation to try to explain something is at the heart of building a theory.
• B) If a theory makes people uncomfortable then it should be discarded or ignored.
• C) In order for a theory to be valid it must be a perfect description of reality.
• D) Building a theory and evaluating a theory are the same thing.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay off its short-term liabilities with its short-term assets.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.

Liquidity

The ability of an asset to be quickly converted into cash without significant loss in value.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.