If a Firm Increases Its Current Assets Relative to Total

question 246

Multiple Choice

If a firm increases its current assets relative to total assets, ________.

• A) it increases return and reduces risk
• B) it increases return and increases risk
• C) it reduces return and reduces risk
• D) it reduces return and increases risk

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Definitions:

Bond Discount

The difference between the face value of a bond and the price for which it is sold, when the bond is issued at less than its face value.

Equity Method

A method where an investment is initially recorded at cost and subsequently adjusted for the investor's proportionate share in the net assets of the investee, recognizing income or loss.

Intercompany Sale

Transactions that occur between two divisions or subsidiaries within the same parent company, often for the purpose of transferring goods or services.

Pre-tax Gain

Income generated before any taxes have been applied.