Because the Assets Included in the Current Ratio Have Different

question 58

Multiple Choice

Because the assets included in the current ratio have different levels of liquidity that reflect different degrees of collectability,many companies use which of the following ratios to measure current liquidity?

• A)Current ratio.
• B)Acid-test.
• C)Working capital.
• D)Return on Equity.

---

Definitions:

Capital Goods

Long-lasting goods acquired and used by businesses to produce goods and services and contribute to their productive capacity.

Productive Efficiency

A situation where it's impossible to produce more of one good without producing less of another, utilizing all resources efficiently.

North Korea

A country in East Asia, known for its strict government regime, isolation from most of the international community, and significant human rights concerns.

Command Economy

An economic system where the government controls the production, distribution, and prices of goods and services.