A Firm Has a Current Ratio of 1

question 42

Multiple Choice

A firm has a current ratio of 1.4 and a quick ratio of 0.9.Given this,you know for certain that the firm:

• A)pays cash for its inventory.
• B)has more than half its current assets invested in inventory.
• C)has more cash than inventory.
• D)has more current liabilities than it does current assets.
• E)has positive net working capital.

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Definitions:

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