Suppose a Company Unexpectedly Receives a Huge Order for Its

question 221

Short Answer

Suppose a company unexpectedly receives a huge order for its main product. To cope with this, the owner borrows money to rent an additional facility to fill the orders and to pay the temporary workers who will produce the large order. The owner does this hoping that the additional costs will be more than covered by the revenue from selling the additional units of the product. Which ratio will be MOST affected by these decisions?
The short-term solvency ratio
The long-term solvency ratio
The profitability ratio
The activity ratio
The equity ratio

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Definitions:

Maori Ancestry

The heritage or lineage of the Maori people, the indigenous Polynesian inhabitants of New Zealand.

Maori

The Indigenous Polynesian people of mainland New Zealand, known for their rich culture and history.

New Zealand

is an island country in the southwestern Pacific Ocean, known for its indigenous Maori culture, picturesque landscapes, and as a location for the filming of the "Lord of the Rings" series.

Matrilineal Descent

Descent traced exclusively through the female line of ancestry to establish group membership.