Which of the Following Is the Effect on a Company's

question 69

Multiple Choice

Which of the following is the effect on a company's liquidity and profitability metrics when it purchases a piece of equipment? ​

• A) ​Its free cash flow decreases.
• B) ​Its free cash flow increases.
• C) ​Its asset turnover increases.
• D) ​Its asset turnover remains unaffected.

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Definitions:

Elastic

Describes a situation in which the supply or demand for a good or service is highly responsive to changes in price.

Good Substitutes

Products or services that can be used in place of one another, where the increase in price of one leads to an increase in demand for the other.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good changes in response to a change in its price.

Total Expenditures

The sum of all spending or costs incurred by an individual, firm, or government.