Minnie Knows That Double Entry Has a Lot of Short-Term

question 302

Multiple Choice

Minnie knows that Double Entry has a lot of short-term debt coming due in the next year, and wants to make sure that the company will have the ability to make the required payments. Given a troubling downturn in construction activity over the past couple of months, she is not confident that Double Entry can count on selling its current inventory of doors before the debt comes due. Which of the following ratios would be most relevant to Minnie?

• A) current ratio
• B) debt to equity ratio
• C) return on sales
• D) acid-test ratio

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Definitions:

Pollution Abatement

Measures taken to reduce, control, or eliminate pollution from various sources to improve environmental health.

Diminishing Returns

Diminishing returns is an economic principle stating that as one factor of production increases while others are held constant, the additional output (returns) from the increased factor will eventually decrease.

Free Ride

Benefiting from a service or good without having to bear the cost or effort of obtaining it, usually in the context of public goods.

Illegal File Sharing

The unauthorized distribution of digital content, such as music, movies, or software, over the internet.