A _____ Current Asset Investment Policy Calls for Relatively Large

question 3

Multiple Choice

A _____ current asset investment policy calls for relatively large amounts of current assets to be carried by a company.

• A) relaxed
• B) restricted
• C) moderate
• D) lean-and-mean
• E) precautionary

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Definitions:

Debt Ratio

A financial metric that measures the proportion of a company’s total debt to its total assets, indicating the company's leverage level.

Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue; it is calculated by dividing sales revenue by total assets.

Return on Assets

A financial ratio indicating how profitable a company is relative to its total assets, measuring how efficiently a company uses its assets to generate earnings.

Inventory Turnover

Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.