A Current Ratio of 2

question 167

Multiple Choice

A current ratio of 2.5 means that for every dollar of:

• A)accounts payable,there is $2.50 of cash.
• B)current liabilities,there is $2.50 of current assets.
• C)current assets,there is $2.50 of current liabilities.
• D)total liabilities,there is $2.50 of cash.

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Definitions:

Diseconomies of Scale

The phenomenon where, beyond a certain point, the cost per unit increases as a company continues to grow in size and output.

Per-Unit Cost

The average cost for each product produced, calculated by dividing the total production costs by the total units produced.

Output

The total quantity of goods or services produced by a firm, sector, or economy within a certain period of time.

Explicit Costs

Payments by a firm to purchase the services of productive resources.