An Equilibrium

question 73

Multiple Choice

An equilibrium:

• A)is a condition that is reached eventually in any market.
• B)is a state that will continue indefinitely as long as exogenous factors remain unchanged.
• C)is a concept that is often meaningless because most markets never reach equilibrium.
• D)is a temporary state.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term and long-term obligations, calculated as current assets divided by current liabilities.

Acid-test Ratio

A financial metric that assesses a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventory.

Current Ratio

This ratio evaluates the ability of a business to cover its obligations due in the next year, by calculating the proportion of its current assets to its current liabilities.

Working Capital

An indicator of a company's short-term financial health, calculated as current assets minus current liabilities.