As a Short-Term Creditor Concerned with a Company's Ability to Meet

question 63

Short Answer

As a short-term creditor concerned with a company's ability to meet its financial obligation to you, which one of the following combinations of ratios would you most likely prefer? $\begin{array}{lll}\text {Current }&&\text {Debt }\\\text { ratio } & \text { TIE } & \text { ratio }\\\hline\end{array}$ a. $0.5\quad0.5\quad0.33$
b. $1.0 \quad1.0\quad0.50$
c. $1.5 \quad 1.5\quad0.50$
d. $2.0 \quad 1.0\quad0.67$
e. $2.5 \quad 0.5\quad0.71$

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Definitions:

Mono-operation Bias

A form of research bias resulting from using only one method or approach to collect data or measure variables, potentially limiting the validity of findings.

Construct Validity

The extent to which a test measures what it claims to be measuring, ensuring the accuracy of the theoretical concept it intends to reflect.

Internal Validity

The extent to which the results of a study are due to the manipulation of the independent variable and not other factors.

Causal Relationship

indicates a situation where one variable directly affects another variable, implying causation rather than just correlation.