A Firm Has a Lower Quick (Or Acid Test) Ratio

question 8

Multiple Choice

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

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

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Definitions:

Ages of Jockeys

Refers to the distribution or range of years that professional riders of horses in races fall into.

Extreme Values

Values in a data set that are significantly higher or lower than the majority of the observations.

Box Plot

A standardized way of displaying the distribution of data based on a five number summary: minimum, first quartile, median, third quartile, and maximum.

Distribution

The method by which something is distributed among a group or dispersed across an area.