Which of the Following Statements About Current Ratios Is Most

question 59

Multiple Choice

Which of the following statements about current ratios is most appropriate?

• A) The determination of whether a current ratio is acceptable is best made by reference to industry norms.
• B) A current ratio less than 1.5 is unacceptable.
• C) A current ratio greater than 1.0 is excellent.
• D) The determination of whether a current ratio is acceptable is best made by reference to industry norms, a current ratio less than 1.5 is unacceptable and a current ratio greater than 1.0 is excellent.

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Definitions:

Cash Manager

is a professional responsible for overseeing and managing a company’s cash flow, ensuring there are sufficient funds available to meet the day-to-day operations.

Short-Term Investment

Investments that are made to hold for a short period, usually less than one year, with the aim of selling for a profit in the near term.

Borrowing Activities

The actions undertaken by an individual or organization to obtain funds from external sources, typically involving loans or debt issuance.

Accounts Receivable Policy

Guidelines a company follows to manage the collection of money owed from clients.