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Which of the Following Statements About Liquidity Ratios Is True

Question 55

Multiple Choice

Which of the following statements about liquidity ratios is true?


A) The higher the current ratio, the more likely a firm is able to pay its short-term obligations
B) The lower the quick ratio relative to the current ratio, the safer a firm is in terms of liquidity
C) The ratio of net working capital to total assets always lies between 0 and 1
D) Relatively high current ratios are usually a sign of efficient working capital management
E) The lower the current ratio, the more likely a firm is able to pay its short-term obligations

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