Which of the following statements about the current ratio is accurate?

Select one:

a. The higher the current ratio, the higher the level of cash in a firm.

b. It will always be greater than the quick ratio in companies that carry inventory.

c. Use of book values in calculation of this ratio is unacceptable because the market values of these assets and liabilities tend to deviate from book values.

d. This ratio is intended to indicate the long run liquidity position of the firm.

e. This ratio is calculated by dividing current liabilities by current assets.

Answer rating: 100% (QA)

Out of the provided optionsthe most accurate statement about the current ratio is c Use of book valu... View the full answer