If a Company Has a Healthy Current Ratio but a Significantly

question 46

Multiple Choice

If a company has a healthy current ratio but a significantly lower quick ratio,then you can assume that:

• A) the cost of goods sold represents more than half of sales.
• B) current liabilities exceed current assets.
• C) the firm sells only on a cash basis.
• D) inventory represents a large portion of the firm's current assets.

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Definitions:

Domesticated

Pertaining to animals that have been tamed and kept by humans as pets or for work or food; or legal documents formally recognized and enforced by a jurisdiction different from where they were issued.

Good Samaritan Statutes

Laws offering protection to individuals who give reasonable aid to those who are injured or in peril, without fear of being sued for unintentional harm.

Impose Liability

To legally hold an individual or entity responsible for causing harm or damage, making them subject to penalties or compensation.

Pure Comparative Negligence

A defense accepted in some states whereby the defendant is not liable for the percentage of harm that he or she can prove can be attributed to the plaintiff’s own negligence.