Which of the following statements is TRUE?
A) The current ratio is current assets divided by current liabilities.
B) Total asset turnover is net income divided by total assets.
C) The cash coverage ratio equals cash divided by current liabilities.
D) The quick ratio equals current assets - current liabilities divided by current liabilities.
Answer: A
Explanation: A) Total asset turnover equals SALES divided by total assets. The CASH RATIO equals cash divided by current liabilities. The quick ratio equals (current assets - INVENTORIES) divided by current liabilities.
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