Final answer:
The incorrect statement is a) If the quick ratio is the same as the current ratio; it will indicate that inventories are higher than they should be. This is because the quick ratio does not include inventories; thus, if both ratios are equal, the company's inventories are negligible.
Step-by-step explanation:
The statement that is incorrect is: a) If the quick ratio is the same as the current ratio; it will indicate that inventories are higher than they should be. This statement is incorrect because the quick ratio excludes inventory from its calculation, meaning that if the quick ratio is equal to the current ratio, the business has no inventory or negligible inventory, not higher inventory. Consequently, if both ratios are the same, it suggests that inventories do not significantly impact the company's short-term liquidity.
The times interest earned ratio is a measure of a company's ability to meet its interest obligations. It is calculated by comparing earnings before interest and taxes (EBIT) to interest expense. Accounts receivable are considered a liquid asset because they can be converted into cash with minimal discounts; hence, this statement is also correct: e) Accounts receivable can easily be converted into cash with only small discounts and therefore it is considered as a liquid asset. Finally, the total debt ratio measures the percentage of a company's assets that are financed by debt and is indeed calculated as: d) Total Debt Ratio = Total Liabilities / Total Assets.