If the Current Ratio for a Company Is 2

question 72

Multiple Choice

If the current ratio for a company is 2.5, this means that:

• A) the company is able to pay all its debts immediately.
• B) its current income is 250% of its previous income.
• C) if the company had $100 of current liabilities, it also has $250 of current assets.
• D) its debt is 2.5 times the industry average.

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Definitions:

Cash Offer

A proposal to buy assets or securities for cash, rather than through the exchange of shares or other forms of compensation.

Rights Equivalent

A representation of the number of rights needed to buy one share at a discounted price during a rights issue, reflecting the value of these rights.

Subscription Price

The set price at which investors can buy shares of a stock or fund before they are offered to the public.

Market Price

This is the current price at which an asset or service can be bought or sold.