In Order to Calculate the Current Ratio for Your Firm,you

question 144

Multiple Choice

In order to calculate the current ratio for your firm,you divide the total value of current assets by:

• A)Earnings per share.
• B)The total value of current liabilities.
• C)The total owners' equity.
• D)The total cost of goods sold.

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Definitions:

Outstanding Shares

The total number of shares of a corporation that are currently owned by investors, including restricted shares owned by the company's officers and insiders.

Fair Value

An estimate of the market price of an asset or liability, based on the current market conditions and the asset's characteristics.

Goodwill

The intangible asset that arises when a company acquires another for a price higher than the fair value of its net identifiable assets.

Net Assets

The difference between total assets and total liabilities on a company's balance sheet, representing the owner's equity.