Which of the Following Combinations of Asset Structures and Financing

question 66

Multiple Choice

Which of the following combinations of asset structures and financing patterns is likely to create the least volatile earnings?

• A) illiquid assets and heavy short-term borrowing
• B) illiquid assets and heavy long-term borrowing
• C) liquid assets and heavy long-term borrowing
• D) liquid assets and no debt

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Definitions:

Support Department

A unit within an organization that provides essential services and support to the core departments, facilitating their operations rather than directly contributing to the production of goods or services.

Number Of Computers

The total count of computing devices within a specific inventory or environment.

Transfer Price

The price charged for goods or services transferred between departments or subsidiaries of the same company, often used for accounting or tax purposes.

Variable Costs

Costs that vary directly with the level of production or sales, such as materials and labor directly involved in manufacturing.