Holding All Other Factors Constant, If a Firm Increases Its

question 71

Multiple Choice

Holding all other factors constant, if a firm increases its current assets relative to total assets,

• A)it increases return and reduces risk.
• B)it increases return and increases risk.
• C)it reduces return and reduces risk.
• D)it reduces return and increases risk.
• E)none of above are correct

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Definitions:

Bad Debts Expense

The cost to a company resulting from the inability to collect a receivable because a customer is unable to fulfill their payment obligations.

Product Warranty Costs

Expenses incurred by a company due to repairing or replacing products that fail to perform satisfactorily within a given warranty period.

Operating Loss

A situation where a company's operating expenses exceed its revenues, indicating it is not making a profit from its core activities.

Income Tax Rate

The fraction of earnings subject to taxation for either individuals or corporations.