For Several Years, Flame Corporation Has Had a Current Ratio

question 84

Multiple Choice

For several years, Flame Corporation has had a current ratio that was consistent with other companies in its industry.For the most recent year, Flame's current ratio was significantly higher than that for the industry.What is the best possible explanation for this situation?

• A)The other companies in the industry were not as profitable.
• B)Flame's liquidity has improved or is not leveraging financial resources effectively.
• C)Flame has less property, plant and equipment than other companies.
• D)Flame has too much debt.

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Definitions:

Minor Aspect

A less significant or minor detail or element of a larger issue or subject.

Anticipatory Breach

Occurs when one party to a contract indicates they will not fulfill their contractual obligations before the due time.

Legal Position

The stance or argument taken by a party in a legal proceeding that is grounded on laws, regulations, or legal principles.

Anticipatory Breach

A situation in contract law where one party shows intent not to fulfill their contractual obligations before the due performance.