Which of the Following Statements About the Capital Acquisitions Ratio

question 81

Multiple Choice

Which of the following statements about the capital acquisitions ratio is incorrect?

• A)The ratio is computed by dividing cash flow from operating activities by cash paid for property, plant, and equipment.
• B)Because the need for investment in property, plant, and equipment differs dramatically across industries, a firm's ratio should only be compared with its prior years' ratio or with firms in the same industry.
• C)A high ratio indicates more need for outside financing of current and future purchases of property, plant, and equipment.
• D)The ratio increases when an account receivable is collecteD.The capital acquisitions ratio is calculated by dividing cash flow from operating activities by cash paid for property, plant, and equipment.A high ratio demonstrates less need for outside financing.

---

Definitions:

Curve

A graphical representation of data points or a mathematical function on a plane, showing the relationship between two or more variables.

Normal Distribution

A chance distribution evenly balanced around the mean, revealing that instances close to the mean occur more frequently than those far from it.

Standard Deviations

A measure of the dispersion or variability within a set of data, indicating how much individual data points differ from the mean.

Mean

The average value of a set of numbers, calculated by dividing the sum of the numbers by the count of the numbers.