Which of the Following Statements Regarding the Effects of a Business

question 5

Multiple Choice

Which of the following statements regarding the effects of a business decision on a financial ratio is true?

• A) If a company is expanding its facilities, its fixed asset turnover ratio is likely to fall temporarily.
• B) If a company extends its payment period for customers, its quality of income ratio is likely to rise.
• C) If a company eases its credit granting policies, the accounts receivable turnover is likely to rise.
• D) If a company builds up inventories, its days to sell ratio is likely to fall.

---

Definitions:

Identifying Market Opportunity

Identifying market opportunity involves analyzing market trends, needs, and gaps to find untapped areas where a new product or service could be successfully introduced.

Market Opportunity

The potential for a company to increase sales and achieve a sustainable competitive advantage by identifying and serving new markets or segments.

Customer Demand

refers to the desire and willingness of consumers to purchase goods or services at a particular price.

End User Profile

A detailed description of the final consumer for whom a product or service is intended, focusing on their needs, behaviors, and preferences.