sate whether the following statement are true or
fslse.
- Increase in current liabilities and decrease in
current asset represents inflow cash.
- If an individual investor buys or sells a currently outstanding
stock through a broker, this is a primary market transaction.
- Activity ratios explain the firm ability to use assets
efficiently.
- Trade - Off between Risk - Return is the main principle to
maximize the firm value.
- Reduce inventory and use the proceeds to pay off a part of
current liabilities will lead to increase the quick ratio.
- Unethical Behavior of the manager includes using the information
that not available to the public to make money
1. TRUE. Increase in current liabilities and decrease in current assets represents inflow of cash.
2. FALSE. It is a secondary market tranaction.
3. TRUE. Activity ratios explain the firm's ability to use assets efficiently.
4. TRUE
5. TRUE. Quick ratio is given by :
Quick ratio = Current assets - Inventories / Current liabilities
In the above formula,when inventories in the numerator are decreased and current liabilities in the denominator are decreased, then quick ratio will increase.
6. TRUE
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