Which of the Following Combinations of Asset Structures and Financing

question 37

Multiple Choice

Which of the following combinations of asset structures and financing patterns is likely to create the most 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 heavy short-term borrowing

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Definitions:

Cost Concepts

Fundamental ideas that underlie the recording, classification, and reporting of costs in the context of accounting and finance.

Cost Classifications

The categorization of costs based on their characteristics, such as by behavior, purpose, or relevance to decision making.

Cost Data

Refers to the collection of financial information related to the production, operation, or management of a business that is used for budgeting, cost control, and decision-making purposes.

Value Chain

A sequence of activities that a company performs to design, produce, market, deliver, and support its products.