Of the Following Statements About Financial Ratios,which Is NOT True

question 56

Multiple Choice

Of the following statements about financial ratios,which is NOT true?

• A) Financial ratios are designed to assess different aspects of the firm's financial situation.
• B) Financial ratios enable meaningful comparisons among companies of different sizes to assess which companies are performing better and which are performing worse.
• C) A low current ratio implies that a company has adequate liquidity to carry out business operations.
• D) A rule of thumb is that companies should have a current ratio between 1 and 2.
• E) The current ratio is often important in debt covenants.

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Definitions:

Organization Complexity

The degree to which an organization displays varied and numerous elements, structures, and processes, reflecting its multifaceted nature.

Project Complexity

The degree of diverse, interconnected elements and factors within a project, which can impact its execution and outcome.

Communication Process

A series of steps through which information is exchanged between senders and receivers, encompassing message creation, transmission, reception, and interpretation.

Client Team Approach

A collaborative strategy where the client's representatives actively participate in the team managing a project, ensuring the project meets the client's needs and objectives.