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The Current Ratio Is Irrelevant in Liquidity Analysis for Service

question 5

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The current ratio is irrelevant in liquidity analysis for service companies because they do not have inventories among their current assets.


Definitions:

Risks

The potential for losing something of value or the chance of an adverse outcome.

Hurdle Rate

The minimum acceptable rate of return on an investment, used as a benchmark for deciding whether to pursue a project.

Internal Rate of Return

A calculation used to evaluate the profitability of potential investments.

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