A Measure of the Ability of an Entity to Pay

question 39

Multiple Choice

A measure of the ability of an entity to pay all of its current liabilities if they came due immediately is the:

• A)debt ratio.
• B)quick ratio.
• C)liquidity ratio.
• D)accounts receivable turnover.

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Definitions:

Ratification

This is the act of officially confirming or approving a decision or agreement, making it valid and binding.

Carrying Amount

The value of an asset or liability as reported on the balance sheet, reflecting its original cost minus any depreciation, amortization, or impairment charges.

Pre-Acquisition Equity

The equity interest in a company existing prior to its acquisition by another entity, used to determine the acquisition date fair value of the investee.

Dividend Declared

The official announcement by a company's board of directors that a dividend will be paid to shareholders, specifying the amount and payment date.