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.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that suppliers are willing to sell.

Producer Surplus

The difference between the amount producers are willing and able to sell a good for and the amount they actually receive.

Market Price

The current price at which a good or service can be bought or sold in a marketplace, determined by supply and demand conditions.

Whitewater Rafting

An outdoor activity which involves navigating rivers or waterways with varying degrees of rough water using an inflatable raft.