If You Choose to Avoid the Risk of a Traffic

question 40

Multiple Choice

If you choose to avoid the risk of a traffic accident by not driving to work, you are using

• A) Risk avoidance.
• B) Risk reduction.
• C) Risk assumption.
• D) Risk shifting.
• E) Risk increasing.

Understand the components and computation of return on equity and return on total assets.

Grasp the concept of financial leverage, including its effect on company's equity and debt structure.

Recognize the impact of share transactions and asset sales on a company's financial ratios.

Understand liquidity and solvency ratios, particularly the current ratio and acid-test (quick) ratio.

---

Definitions:

Variable Cost

Expenses that change in direct proportion to the amount of goods or services produced.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and loans.

Conversion Cost

The expenses directly related to the transformation of raw materials into finished goods, including labor and manufacturing overhead costs.

Manufacturing Overhead

Indirect costs associated with manufacturing, such as maintenance, utilities, and quality control, not directly traceable to a specific product.