A Firm's Quick Ratio of

question 103

Multiple Choice

A firm's quick ratio of .49 suggests 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:

Opportunity Cost

The cost of foregone alternatives when one choice is made over another, representing the benefits that could have been gained by choosing the next best alternative.

Purely Competitive

Refers to a market structure characterized by a large number of small firms, a homogeneous product, and very easy entry and exit.

Supply Curve

A chart that illustrates the connection between a product's price and the quantity that producers are ready to offer.

Economic Efficiency

A condition in which every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.