Which of the Following Would Indicate an Improvement in a Company's

question 87

Multiple Choice

Which of the following would indicate an improvement in a company's financial position,holding other things constant?

• A) The inventory and total assets turnover ratios both decline.
• B) The total debt to total capital ratio increases.
• C) The profit margin declines.
• D) The times-interest-earned ratio declines.
• E) The current and quick ratios both increase.

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Definitions:

Foreign Corporation

A business entity that is incorporated under the laws of a country different from where it conducts its operations or has its principal business activities.

S Corporation Election

A tax election made by small business corporations with 100 shareholders or less to be taxed as a pass-through entity, avoiding double taxation on corporate income.

Shareholders

Individuals or entities that own one or more shares of stock in a public or private corporation, thus having a financial interest in the company's performance.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the cost of producing each additional unit decreases with the increase in total output.