A Firm with a Total Asset Turnover Lower Than Industry

question 120

Multiple Choice

A firm with a total asset turnover lower than industry standard and a current ratio which meetsindustry standard must have excessive

• A) fixed assets.
• B) debt.
• C) accounts receivable.
• D) inventory.

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Definitions:

Draft

An instrument validating an order by a drawer to a drawee to pay a payee.

Imposter Rule

A legal principle concerning negotiable instruments which states that if an impostor induces a payor to issue a check made payable to the impostor, the drawer is liable for the amount to a holder in due course.

Forgery Rule

A legal principle that addresses the falsification of documents and the consequences associated with such acts.

Endorser

An individual or entity that signs a document (usually on its reverse side) indicating support, approval, or transfer of rights.