Which of the Following Statements Does Not Properly Describe the Current

question 61

Multiple Choice

Which of the following statements does not properly describe the current ratio?

• A)It measures the ability of a firm to pay its debts in the short-run.
• B)It is current assets divided by current liabilities.
• C)It is a measure of a firm's short-run liquidity.
• D)It measures a firm's ability to pay its long-term debts as they mature.

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Definitions:

Conditional Probability

The probability of an event occurring given that another event has already occurred.

Conditional Probability

The probability of an event occurring given the occurrence of another event, often represented as P(A|B).

Independent Events

Two or more events where the occurrence of one does not affect the probability of the other(s).

Event Will Not Occur

The probability that a specific event does not happen, which can be calculated by subtracting the event’s probability of occurring from 1.