Which of the Following Statements About Liquidity Ratios Is True

question 66

Multiple Choice

Which of the following statements about liquidity ratios is true?

• A) The lower the quick ratio relative to the current ratio, the safer a firm is in terms of liquidity.
• B) The higher the current ratio, the more likely a firm is able to pay its short-term obligations.
• C) The quick ratio is always between 0 and 1.
• D) Higher leverage reduces the quick ratio.

---

Definitions:

Social Norms

Unwritten rules or expectations within a society or group that guide members' behavior, helping to maintain order and cohesion.

High Acquaintance

A state of being very familiar or well-informed about something or someone.

Diversity

The inclusion of individuals from a range of different backgrounds and perspectives, including but not limited to race, ethnicity, gender, sexual orientation, and cultural beliefs.

Opportunities

Situations or conditions that present possibilities for progress, advancement, or beneficial action.