Which of the Following Statements Is CORRECT

question 27

Multiple Choice

Which of the following statements is CORRECT?

• A)If a firm has high current and quick ratios, this always indicate that the firm is managing its liquidity position well.
• B)If a firm sold some inventory for cash and left the funds in its bank account, its current ratio would probably not change much, but its quick ratio would decline.
• C)If a firm sold some inventory on credit, its current ratio would probably not change much, but its quick ratio would decline.
• D)If a firm sold some inventory on credit as opposed to cash, there is no reason to think that either its current or quick ratio would change.
• E)The inventory turnover ratio and days sales outstanding (DSO) are two ratios that are used to assess how effectively a firm is managing its current assets.

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Definitions:

Parents

The guardians or caregivers responsible for raising and nurturing a child.

Peers

Individuals who are of approximately the same age or stage of life and who share similar interests or social positions.

Teachers

Educators who guide and facilitate learning for students through instruction, support, and assessment.

Idols

Individuals who are greatly admired, loved, or revered, often in the context of celebrity, cultural, or religious figures.