An Economic System Is a Structure for Allocating Limited Resources

question 45

True/False

An economic system is a structure for allocating limited resources.

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Definitions:

Acid-Test Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities with its most liquid assets, excluding inventory.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.

Accounts Receivable Turnover

A financial ratio indicating how efficiently a company collects its accounts receivable, calculated as net credit sales divided by average accounts receivable.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management and sales performance.