Generally, a High ________ Ratio Could Lead Investors and Creditors

question 92

Multiple Choice

Generally, a high ________ ratio could lead investors and creditors to view the company as being very risky.

• A) debt to owners' equity
• B) acid-test
• C) diluted earnings per share
• D) inventory turnover

Understand and compute liquidity ratios, specifically the quick ratio/acid-test ratio.

Grasp the terms and implications of purchase discounts, returns, and allowances on financial transactions.

Differentiate between financial measures, such as the profit margin ratio and other profitability ratios.

Understand the impact of payment terms and the cost of not taking discounts on financial management.

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Definitions:

Obligations Refusal

A situation where an individual or entity declines to fulfill a duty or agreement previously committed to.

Liquidated Damages

A set sum of money required as a penalty for not fulfilling contractual obligations.

Injunction

A legal order issued by a court that directs an individual or entity to do or to refrain from doing a specific act, used to prevent harm or to preserve the status quo pending a final determination of the case.

Specific Performance

A legal remedy requiring a party to execute a contract as agreed, rather than paying damages for non-performance.