A Quick Ratio That Is Much Smaller Than the Current

question 160

Multiple Choice

A quick ratio that is much smaller than the current ratio indicates that

• A) inventories represent a large portion of current assets.
• B) the company has a low inventory turnover.
• C) inventories represent a small portion of current assets.
• D) the company has a high inventory turnover.

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Definitions:

Baseball Team

A group of players forming one side in competitive baseball games.

Idle Production Capacity

refers to resources, especially in manufacturing, that are not currently in use or are underused, affecting the efficiency and profitability of a business.

Off-Peak Pricing

Charging different prices during different times of the day or during different days of the week to reflect variations in demand for the service.

Demand

The willingness and eagerness of a consumer to purchase a particular product or service at a certain price.