Which of the Following Statements Is Correct

question 21

Multiple Choice

Which of the following statements is correct?

• A)In the text, depreciation is regarded as a use of cash because it reduces fixed assets, which then must be replaced.
• B)If a company uses some of its cash to pay off short-term debt, then its current ratio will always decline, given the way ratio is calculated, other things held constant.
• C)During a recession, it is reasonable to think that most companies inventory turnover ratios will change while their fixed asset turnover ratio will remain fairly constant.
• D)During a recession, we can be confident that most companies' DSOs (or ACPs) will decline because their sales will probably decline.
• E)Each of the above statements is false.

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