Which of the Following Statements Is True

question 81

Multiple Choice

Which of the following statements is true?

• A) The smaller the current ratio the more liquid the firm.
• B) Since inventory is not as liquid as the other current assets it is excluded in calculation of the quick ratio.
• C) A current ratio of greater than one indicates net working capital is negative.
• D) In firms with inventory the quick ratio will always exceed the current ratio.
• E) A current ratio can be less than zero.

Acknowledge the role of extensive information search in complex buying decisions.

Comprehend the strategies businesses employ to reduce cognitive dissonance in customers.

Understand how credit affects consumer purchasing behavior.

Distinguish between B2B and B2C market scenarios.

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Definitions:

Excess Returns

The return on an investment that exceeds the benchmark or risk-free return, reflecting the additional risk taken by the investor.

Small-company Stocks

Equity investments in companies with smaller market capitalization, often characterized by higher volatility and growth potential compared to large-cap stocks.

Large-company Stocks

Shares of large capitalization companies, often known for their stability and paying dividends.

Treasury Bills

Short-term government securities issued at a discount from the face value and mature in a year or less.