A Current Ratio Greater Than 1 Can Tell Us That

question 7

Multiple Choice

A current ratio greater than 1 can tell us that the company ________.

• A)should be able to cover the current liabilities
• B)should be able to keep away from short-term cash problems
• C)may have too much capital tied up in current assets
• D)All of these

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Definitions:

Lost-Horse Forecasting

A humorous term for making predictions based on assumptions after outcomes have already been determined.

Final Forecast

The last prediction made regarding future events or outcomes, such as sales or weather, taking into account all available information up to the present.

Intervening Steps

Intermediate actions or processes that occur between the initiation and completion of a particular activity or goal.

Sales Forecast

The total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts.