Because the Assets Included in the Current Ratio Have Different

question 9

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)Working capital.
• C)Quick ratio.
• D)Debt ratio.

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Definitions:

Raw Materials

Raw materials are the unprocessed natural resources or basic substances that are used to manufacture goods.

Master Budget

A comprehensive financial planning document that consolidates all of a company’s individual budgets and plans for a specific period.

Finished Goods Inventory

Products that have completed the manufacturing process and are ready to be sold.

Budgeted Income Statement

A financial statement that projects the income and expenses for a specific period in the future, helping management with planning and decision-making.