A Company Uses Current Ratio to Analyze Its Financial Position

question 19

Multiple Choice

A company uses current ratio to analyze its financial position.Which one of the following types of information can be obtained from current ratio?

• A)efficiency of inventory management
• B)productivity of the company's assets
• C)information on the short-term solvency
• D)information on the total debt of the company
• E)information on financial leverage

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Definitions:

Variable Overhead Item

Costs that vary with the level of production output, such as utilities or materials, and are not fixed over the short term.

Rate Variances

The difference between the actual rate paid for inputs and the standard rate expected, often analyzed for labor or overhead rates.

Efficiency Variances

The difference between the actual amount of an input used and the expected (or standard) amount needed, multiplied by the standard cost per unit of input.

Landing Gears

A critical aircraft component that supports the plane during landing and takeoff.