Which One of the Following Ratios Deteriorates with the Lessee's

question 94

Multiple Choice

Which one of the following ratios deteriorates with the lessee's capitalization of a lease?

• A)Current ratio
• B)Return on equity
• C)Inventory turnover
• D)Common earnings leverage

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute a cheaper good for a more expensive one.

Income Effect

The alteration in a person's or an economy's earnings and the effect this alteration has on the demand for a product or service.

Price Change

An alteration in the cost of goods or services, which can go up or down, depending on various factors.

Diamond/Water Paradox

An observation in economics illustrating how water, which is essential to life, is cheap, while diamonds, which do not sustain life, are expensive.