If a Firm's Existing Quick Ratio Is 1

question 27

Multiple Choice

If a firm's existing quick ratio is 1.0, and all other variables remain unchanged, the quick ratio can be increased by:

• A) repayment of a loan.
• B) selling of inventory on credit.
• C) receiving interest income.
• D) collecting accounts receivable.
• E) purchase of fixed assets for cash.

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Definitions:

Required Rate of Return

The minimum return an investor expects to receive for investing in a particular asset, considering its risk level.

Constant Growth Rate

In finance, it refers to a steady, unchanging rate at which a company's dividends or earnings are expected to grow over time.

Expected Dividend

The dividend payment a shareholder anticipates receiving, based on past dividend payments or company announcements.

Efficient Markets Hypothesis

A theory stating that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns than the overall market.