A Firm's Current Ratio Is Above the Industry Average

question 18

Multiple Choice

A firm's current ratio is above the industry average. However, the firm's quick ratio is below the industry average. These ratios suggest that the firm

• A) has relatively more total current assets and even more inventory than other firms in the industry.
• B) is very efficient at managing inventories.
• C) has liquidity that is superior to the average firm in the industry.
• D) is near technical insolvency.

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Definitions:

Lower Court

A court of law that is empowered to hear and decide on cases at the first instance, often before they are eligible for appeal to higher courts.

Jurisdiction

The official power to make legal decisions and judgments, often within a specific geographic area or over certain types of legal cases.

Dual Court System

The structure of courts in the United States which consists of both federal and state courts, each with its own jurisdiction and authority.

Federal Courts

The courts of the United States, which operate under the federal government and handle legal issues based on the Constitution, federal laws, and disputes between states or between the U.S. government and foreign entities.