Interest is Big Valley's only fixed cash charge.
Big Valley's market value of equity to book value of debt ratio = 1.5.

Big Valley's current ratio indicates that Big Valley is ________ liquid than the typical firm in the industry,and Big Valley's quick ratio indicates that Big Valley is ________ liquid than the typical firm.

Question

Interest is Big Valley's only fixed cash charge.
Big Valley's market value of equity to book value of debt ratio = 1.5.

Big Valley's current ratio indicates that Big Valley is ________ liquid than the typical firm in the industry,and Big Valley's quick ratio indicates that Big Valley is ________ liquid than the typical firm.

Quizplus · Accepted Answer

The current ratio measures a company's ability to pay off its short-term liabilities with its current assets. A higher current ratio indicates greater liquidity. Therefore, if Big Valley's current ratio is lower than the typical firm in the industry, it is less liquid. The quick ratio is a more stringent measure of a company's liquidity because it excludes inventory from the calculation. A higher quick ratio indicates greater liquidity. Therefore, if Big Valley's quick ratio is lower than the typical firm in the industry, it is also less liquid.

Interest Is Big Valley's Only Fixed Cash Charge