According to Box 5

question 8

True/False

According to Box 5.3, Guttman scaling is a method of constructing a unidimensional scale.

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Definitions:

Acid-Test Ratio

A stringent indicator of a company's short-term liquidity, calculated by dividing liquid assets by current liabilities, excluding inventory from assets.

Financial Stability

The condition of having strong financial health, characterized by a solid balance sheet, manageable debt, and the capability to meet short and long-term obligations.

Operating Efficiency

A measure of how well a company utilizes its resources to generate profit without unnecessary waste.

Financial Ratios

Quantitative measures derived from a company's financial statements, used to evaluate its financial health, performance, and viability.