Which of the Following Statements About the Current Ratio Is

question 393

Multiple Choice

Which of the following statements about the current ratio is accurate?

• A) Use of book values in calculation of this ratio is unacceptable because the market values of these assets and liabilities tend to deviate from book values.
• B) This ratio is calculated by dividing current liabilities by current assets.
• C) It will always be greater than the quick ratio in companies that carry inventory.
• D) This ratio is intended to indicate the long run liquidity position of the firm.
• E) The higher the current ratio, the higher the level of cash in a firm.

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Definitions:

Bureaucracies

Organized administrative systems governed by a set of rules and regulations, typically within large organizations or governments, to ensure efficiency and effectiveness.

Alienation

A feeling of isolation or estrangement from oneself, others, or society, often resulting in disenchantment or disconnection.

Roles, Rules

The prescribed behaviors and expectations associated with specific positions in social structures, and the formal and informal guidelines governing behavior.

Bureaucratic Organization

A type of organization structured through a hierarchy of authority with a clear set of rules and procedures aimed at achieving efficiency and predictability in operations.