Which of the Following Statements Regarding the Capital Acquisitions Ratio

question 25

Multiple Choice

Which of the following statements regarding the capital acquisitions ratio is true?

• A) The capital acquisitions ratio is often calculated as an average over a number of years for better comparison between companies in the same industry.
• B) The calculation of the capital acquisit ions ratio uses the cash expenditures for property, plant and equipment that, all else equal, are reported in the financing activities section of the Statement of Cash Flows.
• C) A ratio greater than 1.0 indicates that outside financing was needed to replace equipment in the current period.
• D) The higher the ratio, the more likely external financing will be needed to fund future expansion.

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