The Degree to Which Current Liabilities Are Covered in the Event

question 17

Multiple Choice

The degree to which current liabilities are covered in the event of liquidation is best captured by the ___________________.

• A)current ratio
• B)net liquid balance
• C)working capital requirement / sales ratio
• D)current liquidity index
• E)cash conversion period

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Definitions:

Coinsurance Clause

A clause in an insurance contract that encourages property owners to insure their property for an amount as close to full value as possible. If the owner insures the property up to a specified percentage—usually 80 percent—of its value, she or he will recover any loss up to the face amount of the policy.

Fire Insurance

A type of property insurance that covers damage or loss to a property due to fire.

Full Value

Refers to the complete or total value of an asset, without any deductions or adjustments.

Foreseeable Types

Refers to the different categories or kinds of outcomes that can be predicted or expected based on current knowledge or trends.