Adkins Company Has a Current Ratio of 1

question 65

Multiple Choice

Adkins Company has a current ratio of 1.0 and a debt ratio of 0.7.Wilson Company has a current ratio of 1.4 and a debt ratio of 0.5.Both companies are in the same industry.Which of the following statements is TRUE?

• A)The two companies' debt ratios and current ratios vary in different directions,and the companies appear to be in similar financial shape.
• B)The two companies' debt ratios and current ratios vary in different directions,and these results do not make sense.
• C)Wilson Company appears to be in better financial shape than Adkins Company.
• D)Adkins Company appears to be in better financial shape than Wilson Company.

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Definitions:

Microgram

A unit of mass equal to one millionth of a gram.

Milliliter

A unit of volume in the metric system, equal to one thousandth of a liter.

Discontinue

To stop using a product or halt a process or treatment, often on a permanent basis.

NPO

An abbreviation for "nil per os," a medical instruction meaning to withhold oral food and fluids from a patient for a specific period.