Assume That a Company Has an Operating Cash Flow Ratio

question 109

Multiple Choice

Assume that a company has an operating cash flow ratio of 0.75. Payment of accrued wages payable would cause the operating cash flow ratio to

• A)decrease.
• B)increase.
• C)be unchanged since the effects offset one another.
• D)be unchanged since it has no impact on any current liability or operating cash flow accounts.

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Definitions:

Discretionary Income

Money remaining after the costs of basic necessities have been paid.

Basic Necessities

Essential items required for survival, including food, clothing, shelter, and clean water.

Lack of Education

A state or condition where an individual has not received sufficient formal learning or instruction.

Economic Necessity

A situation or condition where certain actions or decisions are compelled by financial need or constraints.