The Principle of Opportunity Cost

question 135

Multiple Choice

The principle of opportunity cost

• A) is more relevant for firms than for individuals.
• B) only refers to monetary payments.
• C) is only relevant in economics.
• D) is applicable to all decision-making.

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Definitions:

Dividend Yield Ratio

A financial ratio indicating how much a company pays out in dividends each year relative to its share price.

Acid-test Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities with its quick assets (cash, marketable securities, and accounts receivable).

Debt-to-equity Ratio

A financial indicator showing how much of a company's assets are financed by debt compared to shareholders' equity.

Receivable Turnover

A financial ratio that measures how efficiently a company collects its outstanding credit sales, typically calculated annually.