Which of the Following Is the Effect of Purchasing Merchandise

question 38

Multiple Choice

Which of the following is the effect of purchasing merchandise for cash on a company's liquidity and profitability metrics?​

• A) ​There is no effect on liquidity and profitability.
• B) ​There is an increase in liquidity, while profitability remains unchanged.
• C) ​There is an increase in profitability, while liquidity remains unchanged.
• D) ​There is an increase in both liquidity and profitability.

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Definitions:

Arbitrage Strategy

An investment strategy aiming to profit from price differences of the same asset across different markets without market risk.

SEC Regulation

A set of rules and guidelines issued by the U.S. Securities and Exchange Commission to protect investors and maintain fair and orderly functioning of the securities markets.

Transparency

The degree to which a company's actions are observable, understandable, and disclosed to the outside world, especially to investors.

Advertise

To announce or promote a product, service, or event publicly to encourage commercial interest.