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Question: virtuals current ratio is133 and its quick ratio is 075...

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Virtual’s current ratio is1.33 and its quick ratio is 0.75 , whereas Gaia’s current ratio is1.66 , and its quick ratio is0.93 . Which of the following statements are true? Check all that apply. Gaia Group has a better ability to meet its short-term liabilities than Virtual Industriesnc. A current ratio of 1 indicates that the book value of the company’s current assets is equal to the book value of its current liabilities. If a company has a quick ratio of less than 1 but a current ratio of more than 1, and if the difference between the two ratios is large, it would mean that the company depends heavily on the sale of its inventory to meet its short-term obligations. As compared to Virtual Industriesnc., Gaia Group has lesser liquidity and relatively greater reliance on outside cash flow to finance its short-term obligations. An increase in the current ratio over time would always mean that the company’s liquidity position is improving. One of the most important assumptions behind the calculation of quick ratio is that: The firm’s accounts receivables will be collected late (after the expiration of the credit period) or are uncollectible The firm’s accounts receivables can be collected and converted into cash within the time period for which credit was granted The firm’s inventories are highly liquid and can be sold quickly with minimal loss of value to assist in the settlement of the firm’s financial obligations

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