Which of the following is true of current ratio? A) The more ...

[PhilipSeeMore]

Which of the following is true of current ratio?
 
  A) The more predictable a firm's cash flows, the higher the acceptable current ratio.
  B) A higher current ratio indicates a higher return on equity.
  C) The more predictable a firm's current ratio, the higher the current liabilities.
  D) A higher current ratio indicates a greater degree of liquidity.

Question 2

The purpose of the restrictive debt covenant that limits the distribution of profits to shareholders is to ________.
 
  A) assure the lender that additional borrowing is constrained or may be subordinated to the original loan
  B) limit the amount of fixed-payment obligations
  C) ensure a cash shortage does not cause an inability to meet current obligations
  D) avoid default of payments to bondholders

[zhanghao]

Answer to Question 1

D

Answer to Question 2

D

[PhilipSeeMore]

Gracias!

[Sarahjh]

Excellent