The Liquidity of a Company Can Be Measured Using the Current

question 227

Short Answer

The liquidity of a company can be measured using the current ratio and the ________, which only includes the most liquid current assets in its calculation.

---

Definitions:

Plantwide Predetermined Rate

A single overhead absorption rate calculated for an entire factory, used to allocate overhead costs to products.

Machine-Hours

A measure of the amount of time a machine is operated, used in the calculation of manufacturing costs and allocation.

Manufacturing Cost

The total cost incurred by a company to produce a specific quantity of a product, including materials, labor, and overhead.

Departmental Predetermined Rates

Specific predetermined overhead rates calculated for different departments within a company, to more accurately allocate costs.