If AE = 100 + 0

question 121

Multiple Choice

If AE = 100 + 0.7Y and Y = 300, then unplanned inventories

• A)increase by 10.
• B)increase by 200.
• C)decrease by 10.
• D)decrease by 200.
• E)do not change and equilibrium exists.

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Definitions:

Price-earnings Ratio

A valuation metric used to measure a company's current share price relative to its per-share earnings.

Acid-test Ratio

A financial metric that assesses a company's ability to pay off its short-term liabilities with its most liquid assets, excluding inventory.

Return on Assets

A financial ratio that indicates how efficiently a company uses its assets to generate profit, calculated as net income divided by total assets.

Debt/assets Ratio

A financial ratio that compares the total amount of debt a company has to its total assets, indicating how much of the assets are financed by debt.