At Year-End 2010,General Tech Reported a Quick Ratio of 2

question 87

Multiple Choice

At year-end 2010,General Tech reported a quick ratio of 2.75 and at year-end 2009 it was 3.10.Which of the following is a potential cause of the decrease in this ratio?

• A)An increase in accounts payable and a decrease in inventories.
• B)A decrease in inventories and an increase in long-term notes payable.
• C)A decrease in short-term borrowings and an increase in cash.
• D)An increase in accounts payable and a decrease in cash.

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Definitions:

Consumer Surplus

The variance between the sum consumers are willing to shell out for a good or service and the sum they actually shell out.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to a balance in the market.

Producer Surplus

The discrepancy between the price at which producers are prepared to offer a good or service and the price they actually obtain.

Demand Shifts

Refers to the change in the quantity demanded of a good or service at any given price, caused by factors other than the price of the good itself.