QUESTION 1 1 points Save Answer The inventory turnover and qurrent ratio are related. The combination of a high current ratio and a low inventory turnover ratio, relative to industry norms, suggests that the firm has an above-average inventory level and/or that part of the inventory is obsolete or damaged. True O False QUESTION 2 1 points Save Answer A decline in a firm's inventory tunover ratio suggests that it is managing its inventory more eficiently and also that its liquidity position is improving i.e., it is becoming more liquid. True O False QUESTION 3 1 points Save Answer The current ratio and inventory turnover ratios both help us measure the firm's liquidity. The current ratio measures the relationship of a firm's current assets to its current liabilities, while the inventory turnover ratio gives us an indication of how long it takes the firm to convert its inventory into cash. True False QUESTION 4 1 points Save Answer Suppose a firm wants to maintain a specific TIE ratio. It knows the amount of its debt, the interest rate on that debt, the applicable tax rate, and its operating costs. With this information, the firm can calculate the amount of sales required to achieve its target TIE ratio. True False