Norton Incorporated Could Improve Its Current Ratio of 2 By

question 8

Multiple Choice

Norton Incorporated could improve its current ratio of 2 by:

• A) paying a previously declared stock dividend.
• B) writing off an uncollectible receivable.
• C) selling merchandise on credit at a profit.
• D) purchasing inventory on credit.

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Definitions:

Break-even Quantity

The volume of production or sales at which total revenues equal total costs, resulting in no net loss or gain for a business.

Variable Costs

Expenses that fluctuate with the level of output or production activity.

Profit

The financial gain realized when the revenue from business activities exceeds the expenses, costs, and taxes needed to sustain the activity.

Cost of Capital

The minimum profit rate a business needs to generate from its investments to keep its market value stable and draw in financing.