Minnie Knows That Double Entry Has a Lot of Short-Term

question 302

Multiple Choice

Minnie knows that Double Entry has a lot of short-term debt coming due in the next year, and wants to make sure that the company will have the ability to make the required payments. Given a troubling downturn in construction activity over the past couple of months, she is not confident that Double Entry can count on selling its current inventory of doors before the debt comes due. Which of the following ratios would be most relevant to Minnie?

• A) current ratio
• B) debt to equity ratio
• C) return on sales
• D) acid-test ratio

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Definitions:

Clear-cutting

A logging practice that involves the complete removal of all trees from a specific area.

Even-aged Stand

A forestry term describing a group of trees of similar age within a specific area, typically resulting from reforestation or natural regeneration following a disturbance.

Seed-tree Cutting

A forestry technique where select seed-bearing trees are left standing to regenerate a forest.

Second-growth Forest

A forest that has regrown after a major disturbance, such as logging or fire, and is characterized by younger trees.