Because a Company's Inventory Is Less Liquid Than Its Other

question 42

Multiple Choice

Because a company's inventory is less liquid than its other current assets when investors are assessing liquidity, they should examine the:

• A)debt-equity ratio.
• B)accounts receivable turnover ratio.
• C)acid test ratio.
• D)current ratio.

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Definitions:

Nonprogrammed Decisions

Decisions made in response to situations that are unique, poorly defined, and largely unstructured, often requiring creative solutions.

Programmed Decisions

Decisions that are routine and repetitive, often made using established guidelines or procedures.

Routine Problem

A common or regularly occurring problem that typically has a known and straightforward solution.

Certain Environment

A scenario in decision-making where all necessary information and future outcomes are known and predictable.