Scott Company Had a Current Ratio of 2

question 18

Multiple Choice

Scott Company had a current ratio of 2.76:1 in Year 1 and 2.57:1 in Year 2.This change in current ratio indicates:

• A)the company's debt paying ability has improved.
• B)the company's debt paying ability has weakened.
• C)the company's customers are paying their accounts sooner.
• D)the company is able to sell its inventory faster.

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Definitions:

Decoding

The process of interpreting or making sense of a message or information received.

General Equilibrium

The condition that exists when all markets in an economy are in simultaneous equilibrium.

Economic System

The organized way in which a country allocates resources and distributes goods and services in its society.

Criterion

A principle or standard by which something can be judged or decided.