Liquidity Ratios, Such as the Current Ratio and the Quick

question 38

True/False

Liquidity ratios, such as the current ratio and the quick ratio, tell whether a small business will be able to meet its short-term obligations as they come due.

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Definitions:

Conversion

The process of changing raw materials into finished goods, or the conversion of currencies, data, or resources from one form to another.

Equivalent Units

A principle applied in process costing that transforms units of incomplete production into an equivalent number of units as if they were fully completed.

Weighted-average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning weights to each number before averaging.

Materials

Raw inputs or supplies that are converted into finished goods through the manufacturing process.