Dollar Ltd Has a Current Ratio of 2:1

question 14

Multiple Choice

Dollar Ltd has a current ratio of 2:1. This means that:

• A)there is $2 of current assets for every $1 of current liabilities.
• B)its current assets are half its current liabilities.
• C)its current assets are insufficient to meet its current liabilities.
• D)its current assets are equal to its current liabilities.

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Definitions:

Capital Flow

The movement of money for the purpose of investment, trade, or business production between countries or within a country.

Documentary Letter

A type of credit instrument issued by a bank guaranteeing a seller's payment from a buyer upon presenting specified documents.

Correspondent Bank

A bank that provides services on behalf of another, typically foreign, bank, including currency exchange and handling international transactions.

European Community

A group of European countries that participated in an economic and political union to promote integration and cooperation.