Which of the Following Statements Is CORRECT

question 13

Multiple Choice

Which of the following statements is CORRECT?

• A) When we use the AFN equation, we assume that the ratios of assets and liabilities to sales (A0*/S0 and L0*/S0) vary from year to year in a stable, predictable manner.
• B) When fixed assets are added in large, discrete units as a company grows, the assumption of constant ratios is more appropriate than if assets are relatively small and can be added in small increments as sales grow.
• C) Firms whose fixed assets are "lumpy" frequently have excess capacity, and this should be accounted for in the financial forecasting process.
• D) For a firm that uses lumpy assets, it is impossible to have small increases in sales without expanding fixed assets.
• E) There are economies of scale in the use of many kinds of assets. When economies occur the ratios are likely to remain constant over time as the size of the firm increases. The Economic Ordering Quantity model for establishing inventory levels demonstrates this relationship.
• Problems

---

Definitions:

New York State

A state in the northeastern U.S., known for its large city of the same name, diverse geography, and significant cultural and economic influence.

Mental Health Care

The provision of services aimed at promoting psychological well-being, preventing mental health disorders, and treating mental illness.

Psychoanalytic Therapy

A therapeutic approach developed by Freud that seeks to explore unconscious conflicts and desires that influence current behavior, often through techniques like free association and dream analysis.

Alcoholics Anonymous

A self-help group and fellowship whose members aim to achieve and maintain sobriety through shared experiences, strength, and hope.