The Most Important Information Needed to Determine If Companies Can

question 26

Multiple Choice

The most important information needed to determine if companies can pay their current obligations is the

• A) net income for this year.
• B) projected net income for next year.
• C) relationship between current assets and current liabilities.
• D) relationship between short-term and long-term liabilities.

---

Definitions:

Sales Dollars

A term used to represent the total value, in monetary terms, of all sales transactions within a specified period.

Variable Costs

Operating expenses that fluctuate based on business operations.

Zero Profit

A situation where a business or investment generates no profit but also doesn’t incur a loss, essentially breaking even.

Unit Contribution Margin

The difference between the selling price of a product and its variable costs.