The current assets of Rock Garden Gifts were considered very liquid at the end of the current year. This means that the company
A)has a larger quick ratio than current ratio.
B)must decrease its liquidity in order to appear more favorable to potential investors.
C)should attempt to borrow money in order to remain in business.
D)is able to pay its current obligations using its current assets.

Question

Quizplus · Accepted Answer

The statement "very liquid" means that the current assets are easily convertible to cash, which indicates that Rock Garden Gifts is able to pay its current obligations using those assets. Therefore, the answer is D. Choices A, B, and C are incorrect because they are not relevant or necessary to the situation described.

The Current Assets of Rock Garden Gifts Were Considered Very