Which of the Following Statements Is CORRECT

question 12

Multiple Choice

Which of the following statements is CORRECT?

• A) 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.
• B) Firms whose fixed assets are "lumpy" frequently have excess capacity, and this should be accounted for in the financial forecasting process.
• C) For a firm that uses lumpy assets, it is impossible to have small increases in sales without expanding fixed assets.
• D) There are economies of scale in the use of many kinds of assets. When economies occur the ratios are likely to remain constant over time as the size of the firm increases. The Economic Ordering Quantity model for establishing inventory levels demonstrates this relationship.
• E) 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.

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Definitions:

Intentions

The plans or goals that individuals form to guide their actions, often predicting behavior in various contexts.

Attitudes

Predispositions or tendencies to respond positively or negatively towards a certain idea, object, person, or situation.

Behavioral Intentions

Behavioral intentions are an individual's plans or inclinations to perform a particular action or behave in a certain way in the future.

Beliefs

Deeply held convictions or acceptances that something is true or exists, often forming the basis of attitudes and behaviors.