For Several Years,Bosco Corporation Has Had a Current Ratio That

question 206

Multiple Choice

For several years,Bosco Corporation has had a current ratio that was consistent with other companies in its industry.For the most recent year,Bosco's current ratio was significantly higher than that for the industry.What is the best possible explanation for this situation?

• A)The other companies in the industry were not as profitable.
• B)Bosco's liquidity has improved or is not leveraging financial resources effectively.
• C)Bosco has less property,plant,and equipment than other companies.
• D)Bosco has too much debt.

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Definitions:

Gross Margin

The difference between sales revenue and the cost of goods sold, representing the profit made before accounting for operating expenses.

Net Operating Income

The total profit of a business after operating expenses are subtracted from gross profit but before incomes and taxes are deducted.

Return on Total Assets

A financial ratio that measures the profitability of a company in relation to its total assets.

Income Tax Rate

The percentage at which an individual or corporation is taxed on their income.