Examlex

Solved

A Company's Current Ratio Is 1

question 87

True/False

A company's current ratio is 1.2 and its quick ratio is 0.25. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.


Definitions:

Indirect Method

A method used in cash flow statement preparation that adjusts net income for non-cash transactions.

Book Value

The value of an asset according to its balance sheet account balance, typically calculated as the asset's cost minus any accumulated depreciation.

Stock Issuance

The process by which a company issues new shares of stock to raise capital for business operations or expansions.

Adjusted Book Value

The book value of a company after adjustments have been made for assets and liabilities that may be overvalued or undervalued.

Related Questions