Mergers May Provide Reductions in Average Production Cost as a Result

question 18

Multiple Choice

Mergers may provide reductions in average production cost as a result of:

• A) increased market price.
• B) increased financing.
• C) economies of scale.
• D) diversification.

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Definitions:

Current Ratio

A financial ratio that evaluates a firm's capacity to meet its short-term liabilities, which are due within a year.

Current Assets

Resources anticipated to be turned into cash, disposed of, or used up within a year or during the standard operational cycle of the company.

Current Liabilities

Short-term financial obligations that are due within one year or within a company's operating cycle.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and efficiency.