Other Things Being Equal, Most Managers Would Prefer to Report

question 136

Multiple Choice

Other things being equal, most managers would prefer to report liabilities as noncurrent rather than current. The logic behind this preference is that the long-term classification permits the company to report:

• A) Higher working capital and a higher inventory turnover.
• B) Lower working capital and a higher current ratio.
• C) Higher working capital and a higher current ratio.
• D) Higher working capital and a lower debt to equity ratio.

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Definitions:

Nonprogrammed Decisions

Decisions made in response to situations that are unique, are poorly defined and largely unstructured, requiring creative solutions.

Certainty

The state of being sure or confident about something, often with clear, predictable outcomes.

Risk

The possibility of loss, damage, or any other undesirable event.

Uncertainty

A condition of limited knowledge where it is impossible to exactly describe existing states or future outcomes.