True or False ______ 6) Liquidity ratios indicate how fast a company can generat
ID: 2722964 • Letter: T
Question
True or False
______ 6) Liquidity ratios indicate how fast a company can generate cash to pay bills. ______ 7) Financial ratios are exclusively used for those areas of business that involve investment decisions. ______ 8) The current ratio is a harder test of a firm’s liquidity than the quick ratio. ______ 9) As the interest rate increases, the interest rate factor for the present value of a dollar decreases. ______ 10) To determine the current value of six annual payments of $3,000 at 5%, you would use the present value of a dollar table. _____ 11) As you go further into the future, a given amount will have an increased present value.
Explanation / Answer
6) Liquidity ratios indicate how fast a company can generate cash to pay bills. __True____
As the ratio indicates how much liquid cash the company has in respect to its current liability.
7) Financial ratios are exclusively used for those areas of business that involve investment decisions. _False_____
As there are ratios related to opearational and performance areas also.
8) The current ratio is a harder test of a firm’s liquidity than the quick ratio. ___False___
As Quick ratio is a harder test.
9) As the interest rate increases, the interest rate factor for the present value of a dollar decreases. __True____
As the discount factor value reduces with increased interest rate.
10) To determine the current value of six annual payments of $3,000 at 5%, you would use the present value of a dollar table. _True___
As the PV of of 1$ at the corresponding interest rate is used.
11) As you go further into the future, a given amount will have an increased present value. - FALSE
As the PV of am amount will reduce as we go further into future
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