A Company Has a Current Ratio of 2

question 7

Multiple Choice

A company has a current ratio of 2.75 to 1.What should a manager in the company conclude?

• A)The company is getting the best possible return on its assets.
• B)The company has too many liabilities.
• C)The company is not getting the best possible return on its assets.
• D)The company is not getting the best possible return on its liabilities.

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Definitions:

Expenses

The economic costs that a business incurs through its operations to earn revenue.

Purchase Inventory

The process by which a business buys goods and materials for use in producing its products or for resale to customers.

Advertising

Advertising is the action of calling public attention to products, services, needs, etc., through paid announcements by an identified sponsor.

Business Transaction

Any activity or event that involves the exchange of goods, services, or funds between two or more parties that affects the financial position of a business.