The Beaver Study Indicated the Following Ratio (Ratios)to Be the Best

question 14

Multiple Choice

The Beaver Study indicated the following ratio (ratios) to be the best for forecasting financial failure:

• A)cash flow/total debt.
• B)net income/total assets.
• C)total debt/total assets.
• D)cash flow/total debt and net income/total assets.
• E)all of the answers are correct.

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Definitions:

Chapter 7 Petition

a legal process in the United States bankruptcy law allowing individuals or businesses to declare bankruptcy, leading to the liquidation of assets to pay off debts.

Median Income

Median income is the value separating the income distribution of a group into two equal groups: half the members earning less and half earning more than this value.

Bankruptcy Abuse

Activities that exploit the bankruptcy system in a deceitful or fraudulent manner to gain undue advantage or evade debt obligations.

Debtor's Income

The amount of money received by an individual or entity who owes a debt to another party.