Ace Company Is a Retail Store

question 79

Multiple Choice

Ace Company is a retail store.Due to competition, it is having trouble selling its products.Thus, inventory has been building up.Ace's current ratio has not changed for the past three years, in spite of the inventory buildup.Which of the following statements is true?

• A)As long as the current ratio remains constant, there is no need for concern.
• B)The composition of current assets and current liabilities does not matter.
• C)The management of Ace should consider the effect of slow moving inventory on its liquidity.
• D)Since inventory is a current asset, any increases should automatically cause the current ratio to rise.

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Definitions:

Colon Cancer

A type of cancer that begins in the colon (the longest part of the large intestine), often indicated by polyps that can turn cancerous over time.

Bone Cancer

A type of cancer that originates in the cells of the bones, causing pain, swelling, and weakening of the affected bones.

Lung Cancer

A type of cancer that begins in the lungs, often associated with smoking, but can also occur in non-smokers due to exposure to radon, asbestos, or other factors.

Breast Cancer

A malignant tumor that develops from breast cells, one of the most common cancers among women.