A Firm's New President Wants to Strengthen the Company's Financial

question 74

Multiple Choice

A firm's new president wants to strengthen the company's financial position.Which of the following actions would make it financially stronger?

• A) Increase inventories while holding sales and cost of goods sold constant.
• B) Increase accounts receivable while holding sales constant.
• C) Increase EBIT while holding sales constant.
• D) Increase accounts payable while holding sales constant.
• E) Increase notes payable while holding sales constant.

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Definitions:

Useful Life

The duration during which an asset is expected to be usable for its intended purpose.

Salvage Value

The projected remaining value of an asset following its operational lifespan, once depreciation or amortization has been taken into account.

Recoverable Ore

The portion of ore that can be economically and technically extracted or produced at a profit.

Depletion

The allocation of the cost of natural resources over their useful life, used in accounting to match the expense of extracting natural resources with the revenue generated from them.