The Reliability of the Current Ratio as a Measure of Liquidity

question 47

Multiple Choice

The reliability of the current ratio as a measure of liquidity can be reduced by:

• A) a surplus of marketable securities.
• B) accounts receivable that are paid in advance.
• C) inventory that will not sell.
• D) the use of trade credit to finance current assets.
• E) None of the above

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Definitions:

Child Labor

The employment of children in any work that deprives them of their childhood, interferes with their ability to attend regular school, and is mentally, physically, socially, or morally dangerous and harmful.

Forced Labor

Forced labor is work that individuals are compelled to do against their will, under threat of punishment or other forms of coercion, often in exploitative conditions.

Performance Contingency

A situation or condition where the outcome or success of a process or task is dependent on certain factors or performances being met.

Availability

The state of being readily accessible or obtainable when needed.