A Significant Determining Factor on Whether a Firm Conducts an Activity

question 52

Multiple Choice

A significant determining factor on whether a firm conducts an activity internally is

• A)whether the transaction costs of buying in the activity in the market exceed the administrative cost of doing it themselves.
• B)whether transaction costs in the market of buying in the activity exceed the administrative cost buying it in.
• C)how reliable their workforce is, compared with an external supplier's reliability.
• D)none of the above.

---

Definitions:

End-of-Period Spreadsheets

Tools used in accounting to compile financial information at the end of an accounting period, aiding in the preparation of financial statements.

Current Ratio

A financial metric indicating a firm's capability to settle short-term debts due within a year, derived by dividing current assets by current liabilities.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle, whichever is longer.

Short-Term Solvency

A financial metric indicating a company's ability to meet its short-term obligations, highlighting liquidity.