In a Restructuring It Is Possible That Managers May Use

question 37

Multiple Choice

In a restructuring it is possible that managers may use the opportunity to write down assets that do not even relate directly to the restructuring action.Why might a manager decide to write down an asset that is not included in the restructuring action?

• A) The manager is practicing conservatism.
• B) The write down relieves future periods of depreciation expense, which increases cash flows.
• C) Normally the stock market reacts positively to restructuring and the greater the amount the better.
• D) The write down relieves future periods of depreciation expense, which increases earnings.

Identify and compute various financial ratios to assess a company's financial position and performance.

Understand the concept of financial ratios and their calculation.

Grasp the importance of the current ratio and working capital measurement in assessing a company's liquidity.

Comprehend the debt to total assets ratio for evaluating a company's solvency.

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Definitions:

Positive Reinforcement

The act of encouraging a desired behavior by offering a reward or positive outcome when the behavior is performed.

Common Misconceptions

Refers to widely held but incorrect beliefs or ideas about a topic or concept.

Positive Person

Describes an individual who maintains an optimistic outlook and focuses on the good in situations.

Negativity

A tendency to focus on the undesirable aspects of a situation or to expect the worst outcome.