Which of the Following Statements Regarding Liquidity Ratios Is True

question 3

Multiple Choice

Which of the following statements regarding liquidity ratios is true?

• A)A low current ratio generally indicates the ability to pay current liabilities on a timely basis.
• B)A low acid-test ratio generally indicates the ability to pay current liabilities on a timely basis.
• C)All current assets are due within one year and therefore have essentially equal liquidity.
• D)A high working capital generally indicates the ability to pay current liabilities on a timely basis.

---

Definitions:

Overgeneralize

Making broad generalizations from a single or few instances, often leading to inaccurate conclusions.

Legislatures

Governing bodies with the authority to make, amend, and repeal laws within a certain jurisdiction.

Experiment

A scientific procedure undertaken to make a discovery, test a hypothesis, or demonstrate a known fact.

Consciousness

The state of being aware of and able to think about one's own existence, sensations, thoughts, surroundings, etc.