Which of the Following Statements About the Current Ratio Is

question 130

Multiple Choice

Which of the following statements about the current ratio is not correct?

• A)When making comparisons across companies,it's far easier to express the relationship as a ratio.
• B)The current ratio is used to evaluate a company's ability to pay current obligations.
• C)Having more current assets than current liabilities will yield a current ratio less than 1.0.
• D)A high current ratio suggests good liquidity.

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Definitions:

Oligopolistic Industries

Industries dominated by a small number of firms, leading to competitive conditions that fall between a monopoly and perfect competition.

Industrial Concentration

A measure of the extent to which production in an industry is dominated by a few large firms.

Technological Advance

The introduction of new technologies or the improvement of existing technologies, enhancing productivity and possibly leading to economic growth.

Product Differentiation

The process of distinguishing a product or service from others in the market to make it more appealing to a particular target market.