The Probability of Financial Distress Depends on Th

question 79

Multiple Choice

The probability of financial distress depends on th?

• A) likelihood of asset growth.
• B) likelihood of dividend payments.
• C) likelihood that a firm will be unable to meet its debt commitments.
• D) chance that a firm's raw material costs will increase.

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Definitions:

Quick Ratio

A measure of a company's ability to meet its short-term obligations with its most liquid assets, excluding inventory.

Debt Ratio

A leverage ratio that measures the proportion of a firm’s total assets that is acquired with borrowed funds.

Current Liabilities

Debts or obligations that a company needs to pay within one fiscal year or within its normal operating cycle.

Statement of Cash Flows

A financial document that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.