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:

Optimum Efficiency

The most favorable condition for the maximal performance and least waste of resources.

Marginal Revenue

The financial gain achieved through the sale of one more unit of a good or service.

Average Total Cost

The cost per unit of output, calculated by dividing the total cost of production by the total quantity of output.

Marginal Cost

The cost added by producing one additional unit of a product or service, crucial for making efficient production and pricing decisions.