Which of the Following Statements Is CORRECT

question 64

Multiple Choice

Which of the following statements is CORRECT?

• A) A decline in a firm's inventory turnover ratio suggests that it is improving both its inventory management and its liquidity position,i.e. ,that it is becoming more liquid.
• B) In general,it's better to have a low inventory turnover ratio than a high one,as a low one indicates that the firm has an adequate stock of inventory relative to sales and thus will not lose sales as a result of running out of stock.
• C) If a firm's fixed assets turnover ratio is significantly lower than the average for its industry,then it could be that the firm uses its fixed assets very efficiently or is operating at over capacity and should probably add fixed assets.
• D) The more conservative a firm's management is,the higher the firm's total debt to total capital ratio is likely to be.
• E) The days sales outstanding ratio tells us how long it takes,on average,to collect after a sale is made.The DSO can be compared with the firm's credit terms to get an idea of whether customers are paying on time.

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Definitions:

Action/Willpower Stage

A phase in the process of changing behavior where the individual applies effort and determination to enact a desired change, often seen in the context of breaking habits or achieving goals.

Maintenance Stage

In behavior change models, it refers to the phase where new behavior is sustained over time and relapse is minimized.

Theory of Reasoned Action

A psychological model that predicts behavioral intention across a wide range of behaviors and contexts, focusing on individual attitudes and social norms.

Theory of Planned Behavior

A social psychology theory that predicts an individual's intention to engage in a behavior at a specific time and place, considering attitudes, subjective norms, and perceived control over the behavior.