A Firm's Current Ratio Changed from 1

question 82

True/False

A firm's current ratio changed from 1.4 times in the previous year to 1.6 times year. Concluding that the firm's liquidity improved is ___________.

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Definitions:

Inventory Turnover

A financial ratio that measures how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.

Accounts Receivable Turnover

A financial metric that measures how often a company collects its average accounts receivable within a specific period.

Return On Total Assets

A profitability ratio that measures the net income produced by the total assets within a company over a period, indicating how effectively a company uses its assets to generate profit.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest payments on outstanding debt with its earnings before interest and taxes.