________ Is One Indication That a Small Business May Be

question 103

Multiple Choice

________ is one indication that a small business may be undercapitalized.

• A)A current ratio below 1:1
• B)A quick ratio above 2:1
• C)A debt-to-net worth ratio above 1:1
• D)A net-sales-to-working capital ratio equal to 3:1

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Definitions:

Net Income

The remaining profit of a company post deduction of all expenses, taxes, and costs from its total revenues.

Unearned Revenues

Income received by a company for goods or services to be provided in the future, which is recorded as a liability until earned.

Liabilities

Financial obligations or debts owed by a business or individual to creditors.

Revenue Earned

Income a company receives from its normal business activities, usually from the sale of goods and services to customers.