Firms a and B Have the Same Current Ratio, 0

question 37

True/False

Firms A and B have the same current ratio, 0.75, the same amount of sales and cost of goods sold, and the same amount of current liabilities.However, Firm A has a higher inventory turnover ratio than B.Therefore, we can conclude that A's quick ratio must be smaller than B's.

---

Definitions:

Cost of Goods Manufactured

The total production cost of goods that are completed and ready for sale during a specific accounting period, including the costs of raw materials, labor, and overhead.

Manufacturing Operations

Processes and activities involved in converting raw materials into finished products, including production planning, assembly, and quality control.

Production Activity

Activities involved in the creation of goods or services, including material selection, manufacturing, and quality control.

Work in Process Inventory

Inventory that includes goods that are in the production process but are not yet completed.