Chase Is Excited Because He Has Just Signed an Agreement

question 155

Multiple Choice

Chase is excited because he has just signed an agreement to purchase steel frames from a company at an excellent price and of very high quality. Once the contract begins, Chase eagerly awaits the first shipment, but it arrives a month behind the agreed-upon schedule, which slows down production at Chase's plant. Chase is furious because he realizes too late that this supplier

• A)produces poor quality.
• B)has bad credit terms.
• C)is unreliable.
• D)is not as inexpensive as he thought.
• E)is unscheduled.

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Definitions:

Quick Ratio

Current assets less inventories divided by current liabilities. A financial ratio that measures a firm’s liquidity, the ability to pay its bills in the short run, without depending on converting inventory into cash. Also called the Acid Test.

Current Ratio

The Current Ratio is a financial metric used to evaluate a company's ability to pay its short-term liabilities with its short-term assets, indicating liquidity.

Prepaid Items

Expenses paid in advance for goods or services to be received in the future.

Statement of Cash Flows

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company, showing how the company's operations are running, where its money is coming from, and how it is being spent.