Which of the Following Is the Correct Formula for Calculating

question 4

Multiple Choice

Which of the following is the correct formula for calculating the cash ratio?

• A)Cash ratio = (Cash + Bank)÷ Total liabilities
• B)Cash ratio = (Cash + Cash equivalents)÷ Total current liabilities
• C)Cash ratio = (Cash + Cash equivalents)÷ Total assets
• D)Cash ratio = (Bank + Cash equivalents)÷ Total current liabilities

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Definitions:

Productive Resource

An economic term for the inputs used in the production of goods or services in the attempt to make an economic profit.

Inelastic

Describing a situation where the demand or supply for a good or service is not highly sensitive to changes in price.

Loan Interest

The additional amount paid by a borrower to a lender in exchange for the use of borrowed money, often expressed as an annual percentage rate.