Which One of the Following Would Likely Be Most Detrimental

question 101

Multiple Choice

Which one of the following would likely be most detrimental to a firm's current ratio if that ratio is currently 2?

• A) Collecting payment on an accounts receivable
• B) Selling marketable securities at cost
• C) Paying off accounts payable with cash
• D)Purchasing inventory on credit

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Definitions:

Servicing Materials

Materials and supplies used in the maintenance and repair of machinery or equipment during the production process or in providing services.

Flexible Budget

A budget designed to adapt to variations in activity or volume levels.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or sales activity within a certain period.

Activity Level

A measure of the volume of production or operations, often influencing costs and used to adjust budgets or forecasts in business.