The Ratio That Is Computed by Dividing the Difference Between

question 104

Multiple Choice

The ratio that is computed by dividing the difference between current assets and inventory by current liabilities is the _____________ ratio.

• A) inventory turnover
• B) days sales outstanding
• C) quick
• D) current
• E) debt-to-assets

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Definitions:

Disbursement Float

The time lag between when a payment is issued by a company and when the funds are actually removed from the company’s account.

Chequing Account

A bank account that allows the holder to make deposits, withdrawals, and payments via cheques and is typically used for everyday transactions.

Paycheque

A check issued to an employee for earned wages, representing the net amount after deductions such as taxes and social security contributions.

Compensating Balances

A minimum bank account balance a borrower is required to maintain as part of a loan agreement, offering the bank some security.