The Fixed Assets Owned by a Company Are Considered to Be

question 89

Multiple Choice

The fixed assets owned by a company are considered to be long-term because:

• A)The high cost of the fixed assets demands that they not be considered short term.
• B)They are purchased with the intent of benefitting the company for a long period of time.
• C)The assets will last for a long period of time.
• D)All of the above are reasons the fixed assets are considered to be long-term.

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Definitions:

Capital Intensity Ratio

A financial metric that measures the amount of assets needed per dollar of sales; higher ratios indicate a greater investment in assets to generate sales.

Capital Intensity Ratio

A measure of a company's investment in physical assets relative to its labor force, indicating the extent to which a firm's operations are automated or labor-intensive.

Operating Capacity

The maximum output that a business can produce in a given period under normal conditions, influenced by its resources and operational constraints.

Notes Payable

Short-term or long-term liabilities in the form of written promises to pay a specified amount with interest by a certain date.