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When the trend of the current ratio (current assets divided by current liabilities) is increasing, it suggests that the firm's overall liquidity position is improving. On the other hand, when the trend of the acid-test ratio (quick assets divided by current liabilities) is decreasing, it indicates a decline in the firm's ability to meet its short-term obligations without relying on inventory. If the firm is depleting its inventories (option a), it would likely result in a decrease in both the current ratio and the acid-test ratio. Option b, having trouble collecting receivables, would mainly impact the accounts receivable turnover ratio but not necessarily the acid-test ratio. Option c, purchasing too much treasury stock, would not directly impact the liquidity ratios. Therefore, option d, carrying excess inventories, is the most appropriate warning indicated by the given trends. It suggests that the firm may have an inefficient inventory management system or that demand for its products has decreased.
Statements: V > I < Z > T = C ≥ A > G ≥ R
Conclusion
I: A < Z
II: C > R
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Statements:
Statement:
Some P are Q
Only a few R are S.
Only a few S are T.
Only S are P.
Conclusion:
T. All R can b...
Read the statement, followed by two conclusions. Read them carefully and select thecorrect option.
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Statements:
I. All pins are bins.
II. All bins are not papers.
Conclusions:
I. Some papers are pins.
II. ...
Read the given statements and conclusions carefully. Assuming that the information given in the statements is true, even if it appears to be at variance...
Read the given statements and conclusions carefully. Decide which of the given conclusions is true based the given statements.
Statement: Cana...
Statements: X ≥ P ≥ O = S; S ≤ H < N; N > I
Conclusions:
I. O ≥ N
II. I > O
III. S < X
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Statement:
Some mad are sad.
Only a few sad are bad.
All bad are lad.
No lad is dad.
All dad are gad.
...