Which of the Following Statements Is CORRECT

question 38

Multiple Choice

Which of the following statements is CORRECT?

• A) When we use the AFN equation, we assume that the ratios of assets and liabilities to sales (A0*/S0 and L0*/S0) vary from year to year in a stable, predictable manner.
• B) When fixed assets are added in large, discrete units as a company grows, the assumption of constant ratios is more appropriate than if assets are relatively small and can be added in small increments as sales grow.
• C) Firms whose fixed assets are "lumpy" frequently have excess capacity, and this should be accounted for in the financial forecasting process.
• D) For a firm that uses lumpy assets, it is impossible to have small increases in sales without expanding fixed assets.
• E) Regression techniques cannot be used in situations where excess capacity or economies of scale exist.
• Multiple Choice: Problems

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Definitions:

Temporal Immediacy

The degree of closeness or immediacy in time, often relating to the urgency or priority of tasks.

Hedonist Principle

The idea that the pursuit of pleasure and avoidance of pain are the primary or most important motivators of human behavior.

Self-Serving Decisions

Choices made that primarily benefit the decision-maker, often at the expense of others or ethical norms.

Balancing Interests Principles

Involves creating a fair and equitable approach to managing and reconciling the diverse and often competing interests of stakeholders in an organization or a project.