Which of the Following Statements Regarding Liquidity Ratios Is True

question 3

Multiple Choice

Which of the following statements regarding liquidity ratios is true?

• A)A low current ratio generally indicates the ability to pay current liabilities on a timely basis.
• B)A low acid-test ratio generally indicates the ability to pay current liabilities on a timely basis.
• C)All current assets are due within one year and therefore have essentially equal liquidity.
• D)A high working capital generally indicates the ability to pay current liabilities on a timely basis.

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