Which of the Following Statements Is True of Current Ratio

question 34

Multiple Choice

Which of the following statements is true of current ratio?

• A) The larger a firm's current ratio, the harder it is for the firm to pay its short-term debts.
• B) The current ratio is a type of leverage ratio.
• C) A current ratio that is below 1.0 signifies a company's inability to pay its short-term liabilities with its current assets.
• D) The current ratio is computed by dividing a firm's current liabilities by its current assets.

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Definitions:

Restitution

The act of compensating for loss, damage, or injury caused by one's actions, often as part of a legal judgment.

Specific Performance

A legal remedy requiring a party to fulfill their obligations as agreed in a contract, rather than paying damages.

Nonfraudulent Misrepresentation

An unintentional provision of false information that leads another to enter into a contract without the intent to deceive.

Out-of-Pocket Damages

Expenses or losses borne directly by an individual or entity due to another party's actions or inactions.