A Weakness of the Current Ratio Is

question 20

Multiple Choice

A weakness of the current ratio is

• A)the difficulty of the calculation.
• B)that it doesn't take into account the composition of the current assets.
• C)that it is rarely used by sophisticated analysts.
• D)that it can be expressed as a percentage, as a rate, or as a proportion.

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Definitions:

Revised Article 9

An update to the Uniform Commercial Code that deals with secured transactions, outlining the rules regarding the granting of a security interest in personal property.

UCC

An all-encompassing body of laws, known as the Uniform Commercial Code, administers the conduct of commercial transactions throughout the United States.

Secured Transactions

A financial arrangement where the borrower guarantees the repayment of a debt by giving the lender a security interest in certain assets as collateral.

Security Interest

A legal claim or right granted by a debtor to a creditor over the debtor's property, securing the payment of a debt or performance of some other obligation.