Excursion Corp

question 118

Multiple Choice

Excursion Corp.increased its dollar amount of working capital over the past several years.To further evaluate the company's short-run liquidity,which one of the following measures should be used?

• A)The current ratio
• B)An analysis of the company's long-term debt
• C)An analysis of the return on stockholders' equity
• D)An analysis of retained earnings

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Definitions:

Fixed Operating Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Variable Costs

Costs that change in proportion to the level of activity or volume of goods produced.

Straight-Line Depreciation

An approach to apportion the cost of a tangible asset throughout its operational life in equal yearly sums.

Net Present Value

A financial calculation used to determine the value of a series of future cash flows by discounting them back to their value in today's dollars.