If a Company's Current Ratio Declined in a Year During

question 13

Multiple Choice

If a company's current ratio declined in a year during which its quick ratio improved, which of the following is the most likely explanation?

• A) Inventory is increasing.
• B) Inventory is declining.
• C) Receivables are being collected more rapidly than in the past.
• D) Receivables are being collected more slowly than in the past.

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Definitions:

Foreign Exchange Loss

A financial loss experienced by a company due to changes in exchange rates affecting foreign currency transactions.

Non-Interest-Bearing Note

A financial instrument or loan that does not accrue interest over time, requiring the borrower to repay only the principal amount.

U.S. Dollar Equivalent

The U.S. Dollar Equivalent is the amount of foreign currency expressed in terms of the value of the United States dollar, based on the current exchange rate.

Put Option

A financial instrument that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.