A Current Ratio That Is High According to an Industry

question 24

True/False

A current ratio that is high according to an industry average might mean the company may have excessive inventory levels or slow moving inventory items.

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Definitions:

Total Assets

The sum of all assets owned by an entity, including cash, investments, inventory, and fixed assets.

Total Equity

The total value of a company's assets minus its total liabilities, representing the owners' equity in the company.

Common Size Cash Flow Statement

A financial statement that presents all line items as a percentage of total cash inflows, facilitating comparison across periods or companies.

Net Income

The amount of money that remains after all expenses, taxes, and costs have been subtracted from a company's total revenue.