Which of the Following Measures a Company's Ability to Pay

question 168

Multiple Choice

Which of the following measures a company's ability to pay its current liabilities?

• A) earnings per share
• B) inventory turnover
• C) current ratio
• D) number of times interest charges earned

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Definitions:

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating profitability beyond normal returns.

Long-run

A period of time in which all factors of production and costs are variable, allowing companies to adjust to market changes completely.

Perfectly Competitive

Describes a market structure where many firms offer identical products, there are no barriers to entry or exit, and all firms are price takers, meaning they accept the market price as given.

Perfectly Competitive

A market structure characterized by an infinite number of small firms, homogeneous products, and easy entry and exit, leading to price-taking behavior.