Indicate whether each of the following statements about financial statement analysis is true or false.Working capital is a measure of the amount of current assets a company would have left after paying its current liabilities.If a transaction causes a company's working capital to increase, the transaction caused the company to become less liquid.Interpretation of a company's current ratio can be difficult because it is an absolute amount.The quick ratio is a more conservative variation of the current ratio.The quick ratio is usually calculated by using the following equation: cash + receivables + current marketable securities ÷ current liabilities.
What will be an ideal response?
Working capital is a measure of the amount of current assets a company would have left after paying its current liabilities. T
If a transaction causes a company's working capital to increase, the transaction caused the company to become less liquid. F
Interpretation of a company's current ratio can be difficult because it is an absolute amount. F
The quick ratio is a more conservative variation of the current ratio. T
The quick ratio is usually calculated by using the following equation: cash + receivables + current marketable securities ÷ current liabilities. T
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