In Comparing the Current Ratios of Two Companies, Why Is

question 42

Multiple Choice

In comparing the current ratios of two companies, why is it invalid to assume that the company with the higher current ratio is the better company?

• A) A high current ratio may indicate inadequate inventory on hand.
• B) A high current ratio may indicate inefficient use of various assets and liabilities.
• C) The two companies may define working capital in different terms.
• D) The two companies may be different sizes.

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Definitions:

Memory Loss

The phenomenon where a person experiences inability to remember information or events that should normally be accessible.

New Memories

Cognitive processes involved in storing, retaining, and recalling information experienced or learned.

Patient "H.M."

A famous case study in neuropsychology involving Henry Molaison, who lost the ability to form new long-term memories after surgery to treat epilepsy.

PET Scans

A type of imaging test that helps reveal how your tissues and organs are functioning, using a radioactive drug to show activity.