Which of the Following Is NOT a Necessary Condition for Classification

question 143

Multiple Choice

Which of the following is NOT a necessary condition for classification as a value-added activity?

• A)The activity produces no change of state.
• B)The change of state was not achievable by preceding activities.
• C)Activity enables other activities to be performed.
• D)All of these are necessary conditions.

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Definitions:

Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated as total debt divided by total assets.

Interest Expense

The cost incurred by an entity for borrowed funds, which can include payment of interest on bonds, loans, convertible debt, and lines of credit.

Capital Structure

The mix of various forms of external funds and equity that a firm uses to finance its activities.

High Leverage

Refers to the use of significant amounts of borrowed money (debt) to increase the potential return of an investment.