A fiRm Which Employs a flExible Short-Term fiNancial Policy Will

question 9

Multiple Choice

A firm which employs a flexible short-term financial policy will have a relatively:

• A) Low ratio of current assets to sales.
• B) Low amount of marketable securities.
• C) Low amount of short-term debt relative to long-term debt.
• D) High amount of short-term debt.
• E) High amount of accounts payable.

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Definitions:

Absorption Costing

An accounting system that factors in all production costs—direct labor, direct materials, and both fixed and variable manufacturing overheads—into the pricing of a product.

Cost-plus Pricing

is a pricing strategy where the selling price is determined by adding a specific markup to a product's cost.

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.

Return on Investment

A measure of the profitability of an investment, calculated as the ratio of net profits to the initial cost of the investment.