All of the Following Regarding the Current Ratio Are True

question 64

Multiple Choice

All of the following regarding the current ratio are true except:

• A)Current ratio is calculated by dividing current assets by current liabilities.
• B)Current ratio helps to assess a company's ability to pay its debts in the near future.
• C)Current ratio does not affect a creditor's decision on whether to allow a company to buy on credit.
• D)Current ratio can affect a creditor's decision about whether to lend money to a company.
• E)Current ratio can reveal challenges in covering short-term obligations if it is less than 1.

---

Definitions:

Advance Directive

A legal document specifying a person's wishes regarding medical treatment in circumstances where they are no longer able to make decisions.

Uniform Probate Code

The Uniform Probate Code is a set of laws designed to simplify the process of transferring assets at death and to standardize probate proceedings across different jurisdictions.

State Law

The body of law enacted by individual states in the United States, as opposed to federal law which is enacted by the federal government.

Disposition

The act of disposing, selling, or transferring property or assets, often as part of a legal settlement or estate management.