The Current and Quick Ratios Have Two Limitations

question 4

Multiple Choice

The current and quick ratios have two limitations.These ratios

• A)emphasize the ineffectiveness of analysts' calculations and focus on liquid assets at a point in time instead of a period of time.
• B)focus on cash instead of working capital,and they represent a point in time instead of covering a period of time.
• C)focus on working capital instead of cash,and they represent a point in time instead of covering a period of time.
• D)are ignored by most creditors and focus on working capital instead of cash.

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Definitions:

Great Depression

A severe worldwide economic downturn that took place during the 1930s, marked by widespread unemployment, deflation, and a significant decline in economic activity.

Full Employment

An economic scenario where every available workforce is employed in the most financially efficient method.

Classical Theory

in economics, refers to a school of thought that emphasizes free markets, the role of competition, and the minimal intervention of government in the economy, foundational to later economic theories.

Wages And Prices

The relationship and dynamics between the compensation paid to labor and the cost of goods and services in an economy.