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:

Industry Price

The general price level for goods or services within a specific industry, often influenced by market dynamics such as supply and demand.

Duopoly

A market structure dominated by two companies, resulting in limited competition.

Demand Curve

A chart depicting how the price of an item correlates with the amount of that item consumers are ready and capable of buying at different price levels.

Marginal Cost

The extra cost involved in producing one more unit of a product or service.