Which of the Following Statements Is CORRECT

question 64

Multiple Choice

Which of the following statements is CORRECT?

• A)Borrowing by using short-term notes payable and then using the proceeds to retire long-term debt is an example of "window dressing." Offering discounts to customers who pay with cash rather than buy on credit and then using the funds that come in quicker to purchase additional inventories is another example of "window dressing."
• B)Borrowing on a long-term basis and using the proceeds to retire short-term debt would improve the current ratio and thus could be considered to be an example of "window dressing."
• C)Offering discounts to customers who pay with cash rather than buy on credit and then using the funds that come in quicker to purchase additional inventories is an example of "window dressing."
• D)Using some of the firm's cash to reduce long-term debt is an example of "window dressing."
• E)"Window dressing" is any action that improves a firm's fundamental, long-run position and thus increases its intrinsic value.

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Definitions:

Long-Run Equilibrium

A state in which all inputs can be adjusted by firms, and no firm has an incentive to change its production level, leading to a stable economic condition.

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices.

Economic Losses

Financial losses suffered by an individual or organization, often as a result of unfavorable business conditions or activities.

Price-Taker Market

A market condition in which individual buyers or sellers cannot influence the market price through their own actions.