A Company with a Quick Ratio of 1

question 54

Multiple Choice

A company with a quick ratio of 1.23 means that the company:

• A) has $1.00 in quick assets for every $1.23 in current liabilities.
• B) has $1.23 in quick assets for every $1.00 in current liabilities.
• C) could not pay off all of its current liabilities using quick assets.
• D) would have to use inventory to help pay off its current liabilities.
• E) has $1.23 in current assets for every $1.00 in current liabilities.

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Definitions:

Term of Loan

The length of time over which the loan is scheduled to be repaid.

Compounded Annually

The process of earning interest on both the initial principal and the accumulated interest from previous periods, calculated once a year.

Rate of Return

Rate of return is a measure of the profitability of an investment over a certain period, expressed as a percentage of the original investment.

Term of Loan

The duration of time over which the borrower is obligated to repay the loan, typically expressed in months or years.