A Bank Is Concerned Because They Feel That a Firm

question 5

Multiple Choice

A bank is concerned because they feel that a firm will not be able to raise enough cash to pay bills that are due within the next year.What ratio are they most likely to examine to address this concern?

• A)Selling and administrative expenses/Net sales
• B)Net sales/Total assets
• C)Current assets - Current liabilities
• D)Net income/Total assets
• E)Long-term debt/(Long-term debt + Net worth)

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Definitions:

Gastric Juice

A digestive fluid formed in the stomach that contains hydrochloric acid, enzymes, and mucus, aiding in the digestion of food.

Absorption

The process by which substances are taken up into, or across, tissues, such as the absorption of nutrients by the intestines into the bloodstream.

Anabolism

The constructive part of metabolism concerned with the biosynthesis of complex molecules from simpler substances within the body.

Catabolism

The breakdown of complex molecules in living organisms to form simpler ones, often resulting in the release of energy.