Seashell Company Is Considered "Very Liquid" for the Year Ended

question 165

Multiple Choice

Seashell Company is considered "very liquid" for the year ended December 31, 2016.This means that Seashell

• A) has a small quick ratio.
• B) must decrease its liquidity in order to appear favorable to stockholders.
• C) should sell plant assets in order to remain in business.
• D) is able to pay its current debts using its current assets.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, highlighting the impact of fixed costs.

Degree

A level of qualification, achievement, or temperature that denotes status, extent, or intensity. In academic contexts, it often refers to the certification received upon completing a course of study at a college or university.

Dolls

Toys designed to resemble human figures, often used as playthings for children.