A Firm Has a Higher Quick (Or Acid Test)ratio Than

question 42

Multiple Choice

A firm has a higher quick (or acid test) ratio than the industry average,which implies.

• A) the firm has a higher P/E ratio than other firms in the industry
• B) the firm is more likely to avoid insolvency in short run than other firms in the industry
• C) the firm may be less profitable than other firms in the industry
• D) a and b
• E) b and c

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Definitions:

Marginal Revenue

Extra earnings received from disposing of an additional unit of a good or service.

Market Price

The price of a commodity when sold in a given market, reflecting supply and demand dynamics.

Profit-Maximizing

The process or strategy of setting prices or production levels to achieve the highest possible profit.

ATC

Average Total Cost, calculated by dividing total cost by the quantity of output produced.