The Current Ratio and Inventory Turnover Ratios Both Help Us

question 78

True/False

The current ratio and inventory turnover ratios both help us measure the firm's liquidity.The current ratio measures the relationship of a firm's current assets to its current liabilities, while the inventory turnover ratio gives us an indication of how long it takes the firm to convert its inventory into cash.

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Definitions:

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Chocolate-covered peanuts are a confectionery or snack consisting of peanuts coated in a layer of chocolate, combining sweet and salty flavors.

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The cost associated with purchasing a single bag of a product, often used in the context of groceries or bulk items.

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