Liquidity Problems Exist for a Company When Its Quick Ratio

question 134

Multiple Choice

Liquidity problems exist for a company when its quick ratio

• A) Is less than the industry average
• B) Is 1 to 1
• C) Is higher than 1 to 1
• D) Is lower than 1 to 1
• E) Is less than the industry average and is lower than 1 to 1

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Definitions:

Net Operating Profit After Taxes (NOPAT)

A measure of an organization's operational efficiency, representing its earnings before interest and taxes minus taxes.

EBIT

Earnings Before Interest and Taxes (EBIT) measures a company's operational profitability by excluding interest and taxes from its net income.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in net profit or loss.

Net Operating Profit After Taxes (NOPAT)

A company's operating profit after adjusting for taxes, reflecting the potential cash earnings if the company had no debt.