A Weakness of the Current Ratio Is

question 108

Multiple Choice

A weakness of the current ratio is

• A) the difficulty of the calculation.
• B) it uses year-end balances of current asset and current liability accounts.
• C) it is rarely used by sophisticated analysts.
• D) it can be expressed as a percentage, as a rate, or as a proportion.

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Definitions:

Absolute Advantage

Refers to the capability of an entity to produce a good or service more efficiently than its competitors using the same amount of resources.

Opportunity Cost

The cost of missing out on the next best alternative when making a decision.

Leisure Time

Time spent not working and free from domestic or professional duties, allowing for rest, recreation, or personal activities.

Unproductive Activity

Unproductive Activity is an economic term that describes actions or work that do not contribute to the production of goods or services or generate economic value.