A Firm's Quick Ratio of

question 15

Multiple Choice

A firm's quick ratio of .89 suggests that the firm:

• A)Has a low level of current liabilities
• B)Has been overstating the value of its inventory
• C)Faces a potentially serious liquidity crisis
• D)Should reduce its holdings of cash and/or marketable securities

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Definitions:

Profits And Losses

Financial results indicating the difference between a business's revenues and its costs over a period; profits indicate revenues exceed costs, whereas losses indicate the opposite.

Scarce Resources

Natural, human, and manufactured assets available in limited quantities that are used for the production of goods and services.

Highest Valued Uses

Refers to allocating resources or goods in a manner that maximizes utility or benefits for an individual or society.

Economic Profits

Profits exceeding the total opportunity costs of all resources used in production; also known as abnormal or supernormal profits.