A Company Has a Quick Ratio of 0

question 94

Multiple Choice

A company has a quick ratio of 0.9 before paying off a large current liability with cash.As a result,what happens to the quick ratio?

• A)It is greater than 0.9.
• B)It is less than 0.9.
• C)It remains equal to 0.9.
• D)It is either greater than 0.9 or less than 0.9 depending upon the dollar amount involved.

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Definitions:

Min Function

In mathematics, a function that identifies the smallest value in a set of numbers.

Income

Represents the money received, especially on a regular basis, for work or through investments.

Price of X

The amount of money required to purchase a specified amount of good or service 'X'.

Price of Y

The cost or value attributed to a good or service denoted by 'Y', often set by market demand and supply or by the seller.