One Common Problem with the Current Ratio Is That It

question 80

Multiple Choice

One common problem with the current ratio is that it is susceptible to "window dressing." If prior to the end of the accounting period Saxon Company has a current ratio of 1.5 and management wishes to boost its current ratio it may decide to:

• A) pay off accounts payable prior to year-end.
• B) purchase more inventory on account.
• C) purchase short-term investments with cash.
• D) purchase more inventory with cash.

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Definitions:

Pedophilia

Pedophilia is a psychiatric disorder characterized by an adult's sexual attraction to prepubescent children.

Erectile Disorder

Inability to develop or maintain an erection due to insufficient blood flow to the penis.

Premature Ejaculation

A sexual dysfunction characterized by ejaculation that occurs with minimal sexual stimulation and before the person wishes it, leading to distress or interpersonal difficulty.

Sexual Climax

The peak of sexual excitement, characterized by strong feelings of pleasure and, typically, by ejaculation in males and vaginal contractions in females.