The Relationship Between Current Assets and Current Liabilities Is Important

question 58

Multiple Choice

The relationship between current assets and current liabilities is important in evaluating a company's

• A) profitability.
• B) liquidity.
• C) market value.
• D) turnover.

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Definitions:

Assets

Economic resources owned or controlled by an individual or a business, which are expected to provide future benefits.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Distorting Tax

A tax that alters the economic behavior of individuals and businesses from what they would have chosen in the absence of the tax.

Economic Welfare

The overall well-being of individuals and societies, often assessed by factors such as wealth, health, and happiness.