Auto Insurance Is Needed Primarily Because of

question 152

Multiple Choice

Auto insurance is needed primarily because of

• A)potential damage to auto.
• B)potential liability claims.
• C)lender's requirements.
• D)state law.
• E)federal requirements.

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Definitions:

Current Ratio

This ratio evaluates the ability of a business to cover its obligations due in the next year, by calculating the proportion of its current assets to its current liabilities.

Working Capital

An indicator of a company's short-term financial health, calculated as current assets minus current liabilities.

Acid-test Ratio

A liquidity metric that measures a company's ability to pay off its current liabilities with its most liquid assets, without relying on the sale of inventory.

Times Interest

Likely refers to the "Times Interest Earned Ratio" or "Interest Coverage Ratio," which measures a company's ability to meet its interest obligations from earnings.