CMA2Q Practice Test

1Single Choice

A company's current ratio is 2.5 and its quick ratio is 1.4. Which of the following best explains the difference between these two ratios?

A.The company has a significant amount of long-term debt that is maturing within the year.
B.The company holds a substantial amount of inventory and/or prepaid expenses that are excluded from the quick ratio.
C.The company has issued preferred stock that is convertible into common stock.
D.The company has revalued its property, plant, and equipment upward during the period.

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