The Quick Ratio Is Considered More Useful Than the Current

question 22

Multiple Choice

The quick ratio is considered more useful than the current ratio for:

• A) Evaluating the profitability of a business that sells inventory very quickly, such as a restaurant.
• B) Evaluating the solvency of a business that turns inventory into cash very slowly, such as a shipbuilder.
• C) Evaluating long-term credit risk.
• D) Evaluating investors' expectations concerning future earnings.

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Definitions:

Control Groups

Groups in an experiment that do not receive the treatment being tested, enabling comparison to groups that do receive the treatment to assess its effect.

Investigator

An individual, often a scientist or researcher, who conducts detailed and systematic examination or inquiry into something through research and experimentation.

Unicellular Eukaryotes

Organisms that consist of a single cell and have a nucleus enclosed within membranes, unlike prokaryotic cells.

Protists

Eukaryotic organisms that are not plants, animals, or fungi and are often unicellular, such as amoebas or algae.