When Financial Managers Are Concerned About Their Firm's Ability to Pay

question 12

Multiple Choice

When financial managers are concerned about their firm's ability to pay off debts that will come due in the next year, they are likely to focus on _________.

• A)liquidity ratios
• B)activity ratios
• C)profitability ratios
• D)leverage ratios

---

Definitions:

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, and the absence of barriers to entry, leading to optimal price and output levels.

Excessively High Profits

Profits that significantly exceed the normal expected return, often seen as unreasonable or indicative of limited competition.

Perfectly Competitive Market

A market structure characterized by many buyers and sellers, homogenous products, and free entry and exit, leading to price determination purely by demand and supply.

Soybeans

A type of legume native to East Asia, widely grown for its edible bean, which has numerous uses including oil, animal feed, and as a food item.