Two Companies Have an Identical Amount of Current Assets and Current

question 23

Multiple Choice

Two companies have an identical amount of current assets and current liabilities. Donald Inc. has 40% of its current assets invested in inventory, whereas Mickey Corp. has 30% of its current assets invested in inventory. Which of the following statements is true?

• A) Donald will have the higher quick ratio.
• B) Donald will have the higher current ratio.
• C) The companies are equally liquid because their current ratios are the same.
• D) Donald is less liquid than Mickey.

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Definitions:

Reciprocity

The exchange of resources, services, or obligations between individuals or groups, often with the expectation of mutual benefit.

Expert Exchange

is a process where individuals with specialized knowledge share information with others, facilitating mutual learning and skill development.

Taskwork Network

The pattern of relationships and interactions that emerge as team members coordinate and execute the specific tasks and activities necessary for achieving their objectives.

Perceived Network

An individual's view or understanding of the social and professional connections they have, and how these networks are structured.