Which of the Following Statements Regarding Liquidity Ratios Is True

question 65

Multiple Choice

Which of the following statements regarding liquidity ratios is true?

• A)A low current ratio generally indicates the ability to pay current liabilities on a timely basis.
• B)A low 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)A high working capital generally indicates the ability to pay current liabilities on a timely basis.

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Definitions:

Premium Price

A pricing strategy where goods or services are sold at a higher price point due to perceived advantages, often related to quality or status.

Bond Quoted

The price or interest rate at which a bond is currently being sold or bought in the market.

Dollar Amount

A numerical monetary value denoted in the currency of the United States.

Interest Earned

The total amount of interest received by a person or entity on investments over a specific period of time.