Which of the Following Statements Regarding Liquidity Ratios Is False

question 41

Multiple Choice

Which of the following statements regarding liquidity ratios is false?

• A)A high current ratio generally indicates the ability to pay current liabilities on a timely basis.
• B)A high acid-test ratio generally indicates the ability to pay current liabilities on a timely basis.
• C)All current assets are due within one year and therefore have essentially equal liquidity.
• D)As a rule of thumb,a current ratio of 1 or higher often reflects an acceptable level of liquidity.

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