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:

Human Nature

Refers to the inherent characteristics, including ways of thinking, feeling, and acting, which all humans tend to have naturally.

Misleading Statement

A statement or claim that provides false, inaccurate, or deceptive information intended to manipulate or deceive.

Leadership Models

Models that describe different approaches and styles used by leaders to guide, motivate, and manage teams.

Theory X/Theory Y

A concept of human motivation and management developed by Douglas McGregor, describing two contrasting models of workforce motivation and behavior.