If Justin Spends $35,000 When His Income Is $60,000, What

question 24

Multiple Choice

If Justin spends $35,000 when his income is $60,000, what is his average propensity to save?

• A) 0.3
• B) 0.42
• C) 0.58
• D) 0.7

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Definitions:

Liquidity Ratio

A financial metric used to determine how quickly a company can pay off its short-term liabilities with its liquid assets.

Maturing Obligations

Debts or promises due to be settled or fulfilled within a short timeframe, usually within the next fiscal year.

Receivables Turnover

A financial ratio that measures the efficiency of a company in collecting its accounts receivable or the speed at which it turns its receivables into cash.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating its efficiency in managing and selling stock.