Liquidity Analysis

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Which of the following is a ratio used to calculate the solvency of an organization?

Current ratio Quick ratio

Which of the following describes the quick ratio?

(Current Assets - Inventory) / Current Liabilities Ability to pay short-term debts with most current assets

A manufacturing company has current assets of $22,000, inventory of $10,000, and current liabilities of $11,000. Which of the following is the quick ratio of the company?

1.1

A manufacturing company has current assets of $22,000 and current liabilities of $11,000. Which of the following is the current ratio of the manufacturing company?

2

Which of the following describes the current ratio?

Ability to pay short-term debts

Which of the following is true about the quick ratio?

It does not rely on the sale of inventory It is calculated using information from a balance sheet It measures the ability to pay short-term debt with most liquid assets

If a manufacturing company has a quick ratio calculation of 1.1, which of the following statements is true about the company?

The company has more assets than liabilities The company can pay its debts with available liquid assets

A net working capital to total assets ratio of 0.06 for a manufacturing company indicates which of the following about the company?

The ratio determines the percentage of assets available after paying off current liabilities

Which of the following statements is true about a manufacturing company if it has a calculated current ratio of 2?

The ratio provides evidence that the management of the company is using assets in a productive manner The current ratio of the company indicates a ratio of twice as many current assets as liabilities


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