Indicate whether each of the following statements about financial statement analysis is true or false.
1. Working capital is a measure of the amount of current assets a company would have left after paying its current liabilities.
2. If a transaction causes a company's working capital to increase, the transaction caused the company to become less liquid.
3. Interpretation of a company's current ratio can be difficult because it is an absolute amount.
4. The quick ratio is a more conservative variation of the current ratio.
5. The quick ratio is usually calculated by using the following equation: cash + receivables + current marketable securities/current liabilities.

Question

Quizplus · Accepted Answer

The Answer of Indicate whether each of the following statements about financial statement analysis is true or false.
1. Working capital is a measure of the amount of current assets a company would have left after paying its current liabilities.
2. If a transaction causes a company's working capital to increase, the transaction caused the company to become less liquid.
3. Interpretation of a company's current ratio can be difficult because it is an absolute amount.
4. The quick ratio is a more conservative variation of the current ratio.
5. The quick ratio is usually calculated by using the following equation: cash + receivables + current marketable securities/current liabilities.

Indicate Whether Each of the Following Statements About Financial Statement