Two Sets of Ratios Are Shown in the Schedule of Funding

question 21

Multiple Choice

Two sets of ratios are shown in the schedule of funding progress prepared for Pension Trust Funds: (A) the funded ratio;and (B) the unfunded actuarial accrued liability as a percentage of covered payroll.The financial status of the pension fund is said to be improving when:

• A)both A and B increase over time
• B)both A and B decrease over time
• C)A increases and B decreases over time
• D)A decreases and B increases over time

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Definitions:

Total Liabilities

The aggregate of all debts and financial obligations owed by a company to creditors at a given point in time.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to fund daily operations and short-term financial obligations.

Current Liabilities

Financial obligations a company is expected to settle within one year or within its operating cycle, whichever is longer.

Current Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with short-term assets.