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18. A current ratio of 2.20 indicates that: for each $1 in current assets, the company has $2.20 in current liabilities for each $1 in
- 18. A current ratio of 2.20 indicates that:
- for each $1 in current assets, the company has $2.20 in current liabilities
- for each $1 in current liabilities, the company has $2.20 in current assets
- for each $1 in total assets, the company has $2.20 in total liabilities
- for each $1 in total liabilities, the company has $2.20 in total assets
- 19. Why is the acid-test ratio considered to be a more conservative measure of liquidity than the current ratio?
- because it considers assets available to pay long-term liabilities
- Because it eliminates items like accounts receivable and current investments
- because it only considers cash available to pay current liabilities
- because it eliminates current assets such as inventories and prepaid expenses
- 20. Other things being equal, the higher the debt to equity ratio, the higher the risk of bankruptcy.
- true
- false
- 21. A debt to equity ratio of 58% indicates that:
- for each $1 in liabilities, the company has $0.58 in stockholders equity
- for each $1 in liabilities the company has $0.58 in retained earnings
- for $1 in stockholders equity the company has $0.58 in assets
- for each $1 in stockholders equity the company has $0.58 in liabilities
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