Asked by
Brynn Williams
on Oct 28, 2024
Verified
Which statement is not true?
A) Not all obligations that become due and will be paid within the next accounting period are classified as current liabilities.
B) The components of working capital are disclosed on the balance sheet.
C) An increasing current ratio could result from decreasing liquidity.
D) An operating cycle is the average time taken by a company to convert receivables back into cash.
Current Liabilities
A company's debts or obligations that are due to be paid to creditors within one year.
Working Capital
The gap between a firm's current assets and current liabilities, signifying its short-term financial stability and operational effectiveness.
Current Ratio
A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.
- Understand the concepts of financial flexibility and liquidity and their importance in the context of financial analysis.
Verified Answer
F2
Learning Objectives
- Understand the concepts of financial flexibility and liquidity and their importance in the context of financial analysis.