The Acid-Test Ratio Differs from the Current Ratio

question 62

Multiple Choice

The acid-test ratio differs from the current ratio:

• A) Because liabilities are divided by current assets.
• B) Because prepaid expenses and inventory are excluded.
• C) Because it measures profitability.
• D) Because it excludes short-term investments.
• E) Because prepaid expenses and inventory are excluded and because it measures profitability.

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Definitions:

Hersey and Blanchard

Psychologists who developed the Situational Leadership Model, which suggests that the most effective leadership style varies depending on the maturity level of team members.

Situational Leadership Model

A leadership theory proposing that effective leadership varies according to, and must adapt to, the needs of the situation and the readiness of the team being led.

Delegating

The act of assigning responsibility and authority to another person to carry out specific activities, while the delegator retains overall responsibility for the outcome.

Hersey-Blanchard Situational Leadership Model

A theory that suggests the most effective leadership style varies according to the task at hand and the maturity level of the team or individual being led.