Two Companies Have an Identical Amount of Current Assets and Current

question 22

Multiple Choice

Two companies have an identical amount of current assets and current liabilities. Chelmsford Inc. has 40% of its current assets invested in inventory, whereas Hanmer Corp. has 30% of its current assets invested in inventory. Which of the following statements is true?

• A) Chelmsford will have the higher quick ratio.
• B) Chelmsford will have the higher current ratio.
• C) The companies are equally liquid because their current ratios are the same.
• D) Chelmsford is less liquid than Hanmer.

---

Definitions:

Poisson Distribution

A probability distribution that measures the probability of a given number of events happening in a fixed interval of time or space.

Probability Distribution

A function in mathematics that calculates the probability of each possible result of an experiment.

Soccer Team

A group of players forming one side in a competitive game of soccer.